Jacinda Ardern says Auckland is facing "fuel poverty" because there aren't enough options for low-income earners to get around.
"We know we need to help lower income New Zealanders. We know that," she told The AM Show host Duncan Garner on Wednesday.
Aucklanders face a double whammy of fuel tax hikes totalling about 20 cents a litre if central government fuel levy increases and a regional fuel tax are brought in.
The tax increase will not be used on State Highways. Instead the Government has reprioritised transport funding around regional roads they say have been underfunded and neglected over the past decade.
Some of the money may be used on getting cars off the road and investing in public transport, cycleways, walkways and the rail network.
Ms Ardern says the Government is suggesting "a threeish cents per-year over three years" excise, "and then of course the regional fuel tax which we've already talked about at great length".
She says it's about giving people travel options in "basket case" Auckland.
"We are wasting money by being stuck in traffic.
"We need to make sure that we give [low income earners] transport options, and at the moment we have fuel poverty in Auckland because people have no alternative to travel any other way.
"That has to change."
AA general manager of motoring affairs Mike Noon says it's "quite a big increase in tax" and "people want to know what they get for it".
"We don't like increases in tax, I think that's pretty evident in New Zealand," he says.
"… I don't think people understand just how much tax we already pay."
Mr Noon says 97 cents per litre of petrol is already tax, but only five cents of that goes towards offsetting carbon emissions.
"In this big package the Government has announced there are a lot of things we do like and I think people actually want," he says.
"But there are some things in there that will be a little bit difficult for people to be happy with."
Ms Ardern says the Government has no choice but to start investing in "every form of multi-motor transport" to get Auckland "out of the dire situation [it is] in".
"We have to do something and we're now asking the public if they agree with us."
Watch the full interview with Jacinda Ardern above.
The AM Show with Duncan Garner, Amanda Gillies and Mark Richardson, weekdays 6-9am on RadioLIVE and streaming live to the rova app on Android and iPhone.