Fuel tax may be simple to administer and penalise gas guzzlers more than granny cars, but change is inevitable.
Last year, the government introduced road user charges (RUCs) for the growing fleet of electric vehicles.
According to Transport and Infrastructure Minister Chris Bishop, fuel-efficient petrol hybrid vehicles have accelerated from 12,000 in 2015 to more than 350,000 today.
Modern petrol cars are also more fuel-efficient than older vehicles.
As Mr Bishop said: "It isn’t fair to have Kiwis who drive less and who can’t afford a fuel-efficient car paying more than people who can afford one and drive more often."
While legislation could be passed next year, implementing nationwide technology changes will be much more challenging.
Nevertheless, the government has signalled 2027 as the target for the system to be "open for business", with third-party providers offering payment services through a consistent approval process.
Given the repeated delays in launching a national bus ticketing system and other costly tech failures and setbacks, the 2027 timeline is ambitious.
Naturally, concerns have been raised about the administration costs, already a problem with the "clunky" current paper-based RUC system.
The government will have to ensure private providers do not embed excessive profits for years to come.
Present road user charges for light vehicles are $76 per 1000km, plus a $12 or $13 administration fee.
Petrol taxes a litre are about 70c for the National Land Transport Fund (the roads), 6c for ACC, 14c for the Emissions Trading Scheme levy and GST on top.
The envisioned system would allow motorists to pay online, like any other bill. Time-of-day or toll-based charges could also be included.
Many new vehicles already have the necessary onboard technology. Older cars would likely require added sensors to measure distance and possibly weight.
About half of heavy trucks already use electronic devices to calculate location, mileage and RUCs.
If the present RUC rates were applied uniformly, they would unfairly penalise small car owners. The "light vehicle" category includes anything under 3500kg, from the top-selling Ford Ranger to the popular compact Suzuki Swift. A Toyota Corolla weighs about 1820kg.
Yet, the Ranger takes up more space and causes significantly more road wear. At present, it pays more per kilometre because of higher fuel consumption.
Introducing weight-based tiers within the "light vehicle" category would create complexity and anomalies at the margins. Still, the current definition is far too broad.
Overhauling any system creates winners and losers, fuelling opposition. Expect robust debate as the details are worked through.
Urban drivers stuck in congestion and with low-speed, stop-start driving would benefit, as they travel shorter distances for similar fuel use.
Those in hilly areas could also come out ahead. Owners of older, less efficient vehicles may see their overall bills drop.
Potential digital surveillance and tracking raise legitimate privacy concerns. It is easy to say that those with nothing to hide have nothing to fear.
However, the brick-by-brick erosion of civil liberties and democracy in the United States is a cautionary tale about what could happen anywhere.
Enforcement will be another challenge. At present, odometer readings at warrants of fitness help ensure a reasonable level of compliance, but some will likely find ways to cheat the new system. Avoiding petrol tax is harder by comparison.
The announcement is no surprise. RUCs were floated before the election and included in the National-Act New Zealand coalition agreement.
The AA supports the change in principle, acknowledging both its logic and its challenges.
These issues must be tackled fairly and effectively along New Zealand’s bumpy road to a new way of funding its roads.
