Fuel price hikes which come into force today will cost motorists an extra $45 a year, based on a person driving a medium-sized car 14,000km a year, the Automobile Association says.

The 3 cent per litre tax increase is the second of three annual increases by the Government, and for Aucklanders it comes on top of a 11.5 cent additional increase last year.

The price hikes were designed to fund large infrastructure projects in the city, and for some Aucklanders the progress in the last year had not been as fast as hoped.

Auckland Business Forum chairman Michael Barnett said there had been some progress in growing public transport numbers, but traffic congestion was still worsening and the transport network was not being upgraded at a rate to match Auckland's rapid growth.

"What are we getting for our money?" he said.

Auckland Mayor Phil Goff defended the rate of progress, saying funding from the regional fuel tax had directly contributed to eight infrastructure projects in the last year.

They included arterial roads in South Auckland, the Eastern Busway which links Panmure and Pakuranga and will later be extended to Botany, and upgrades to the Auckland Airport route.

Other projects which had been given regional fuel tax funding in the last year included the downtown ferry terminal upgrade, road safety improvements, 52km of new walkways and cycleways, and purchases of properties to allow for the construction of the Mill Road corridor.

"This regional fuel tax is on target to raise $150 million a year, and that is matched by the Government," Goff said. "Without that, we would be completing already announced projects and there would be no new projects."

Raising the same amount of funding through rates would lead to a 10 per cent hike for each household, he said.

On top of the $1.5 billion raised by the regional tax over 10 years, it would "unlock" total funding of $4.4 billion which included contributions from the government and developers.

When introducing the latest petrol excise last month, Transport Minister Phil Twyford said successive governments had used petrol taxes to fund the national transport system. The previous National-led Government lifted petrol taxes six times in nine years, adding 17 cents to a litre of fuel.

 

Automobile Association spokesman Mark Stockdale said the latest tax increase would cost the average motorist $45 more a year. This was based on a person driving a medium-sized car 14,000km a year.

"You might not notice it on a weekly basis when you're filling up, but it's another increase in the price of fuel and it is not going to drop - it's fixed.

"It means that the total tax motorists are paying now amount to about $1.09c a litre, including GST. Or if you live in Auckland, about $1.20 litre. So that's actually more than half the price is now tax with the latest increase."

Last month the national petrol price was $2.20 a litre for 91 Octane, down from $2.28 the previous month. The latest increase will take the excise from 63 cents a litre to 66 cents a litre. Next year, it will rise to 70 cents a litre.

Petrol companies were expected to pass on the tax, though discount retailer Gull said it would hold off until Wednesday before applying the higher cost.