By Alex Tarrant
The government has deferred a 1.5 cent per litre increase in fuel tax this year while economic conditions remained tight, Minister of Transport Stephen Joyce says.
The planned increase was due on July 1, with the deferment meaning the fuel tax may have to increase by two cents per litre in 2012.
The Reserve Bank of New Zealand is expected to begin raising the Official Cash Rate in the first quarter of 2012 as inflationary pressures flow through to the economy from the rebuilding of Christchurch. This would in turn cause banks to increase mortgage rates, meaning households would get hit by higher interest payments and higher fuel tax costs around the same time next year.
The announcement also comes as the government faces a credit rating downgrade from Standard & Poor's. Tax revenue has already been lower than expected over the last year as the economy remained sluggish even before the Christchurch earthquakes were taken into account.
'Makes sense to hold off'
Joyce said the now-deferred increase was part of a package of changes agreed to by the government in March 2009, designed to make the funding of New Zealand’s land transport system simpler and more efficient.
The package included the cancellation of the economically inefficient regional fuel taxes and their replacement with smaller national increases, Joyce said in a media release.
"Given the ongoing economic impact of the global recession and the Christchurch earthquakes, it makes sense to hold off on the increase for another year so as not to add further costs to the economy," Joyce said.
The government’s NZ$11 billion roading programme would not be significantly affected over the ten year plan for the programme.
"In fact, ongoing investment in transport infrastructure and services, which is a key economic driver, has never been higher,” Joyce said.
"Officials are currently working on the next Government Policy Statement for Land Transport Funding (GPS), which sets out the government’s transport priorities and how they will be funded. The 2012/13 – 2021/22 GPS will include support necessary to repair Canterbury’s transport infrastructure," he said.
"It will also provide certainty for the rest of the country on the government’s commitments to supporting transport projects and economic growth.
"In order to deliver this programme of investment, it is likely that the government will need to increase FED and RUC in future years. These could be in the order of 2 cents a litre in 2012 and 1.5 cents a litre in 2013," Joyce said.
"In New Zealand, all revenue from RUC and fuel excise is paid into a dedicated National Land Transport Fund (NLTF) to meet the investment required to support road users."
Electioneering?
Labour leader Phil Goff said the government was under pressure from people being squeezed financially, partly due to government policies.
“The latest CPI figures reveal that more than half of the increase is due to action taken directly by this Government. People are feeling the financial squeeze because of National’s economic mismanagement," Goff said, refering to figures released last week which showed general prices rose 4.5% in the year to March, half of which was due to the GST increase on October 1.
"So it’s no surprise that under pressure, the Government has now decided to postpone the fuel tax increase," Goff said.
"It’s important to note that it is just a deferral so it only provides very small and temporary relief for New Zealanders who are struggling. Come the other side of the election, I’m sure National would bump the fuel tax straight back up again,” he said.
If elected on November 26, Labour would make a judgement call on the fuel tax and other tax decisions "when we examine the state of the books that we inherit from National at the election," Goff said.
(Updates with Goff comments, chart, head, comment on interest rates, inflation)
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53 Comments
This is a Government, and a Minister, which/who doesn't yet 'get it'.
All economic activity is underwritten by energy, 100%. No energy, nothing happens.
So because energy is becoming permanently contentious, it's getting more expensive. Which means that everything else (commodities, note Bernard) has to get more expensive too.
So we can predict that if a tax increase isn't viable now, it won't ever be.
Which begs the question - how many of our roads are earmarked to return to gravel, thence to goat-tracks? It going to happen, the question is whether we accept reality, or have things - unsustainable things - decay around us.
Gonna be an interesting next few years.
Gravel roads PDK - mmm....perhaps then we would see a return to the local community grader driver residing in the community for whose roads he was responsible for. Gravel roads would be kept in better condition than they are now.
Think of all those bothersome unwanted callers that you wouldn't be bothered by if you lived on a goat track. :-) Come to think of it I think those callers are going to get fewer and fewer as petrol becomes more expensive.
Government policies – unsustainable - with massive costs for the nation (taxpayer) !
Minister Joyce you are creating unemployment, unskilled labour and poverty and then as a consequence proudly pronounce how police numbers and prison numbers increased.
You proudly pronounce a strike of fuel tax, when public transportation, especially in the big city should be available for the majority of commuters.
You proudly pronounce the progress in building more roads, when infrastructure orders (Energy/ Transport/ Telecommunication) should be allocated to NZcompanies the NZworkforce, in order to lift skill, wages, decent job opportunities and other major advantages for our nation.
Minister Joyce you are underperforming again and therefore you should be sacked.
Who makes ministers accountable in this country ?
Why do we comment endlessly on the stock market/ currencies/ house prices/ etc., but hardly any words on performances of ministers - the leaders of our economy ?
Why not do a monthly list of ministers performance ? Why does the NZpublic/ NZmedia make ministers accountable for their actions/ inactions ?
Because Walter...the Ministers are ...not ...the leaders of our economy...they are the political extensions...lawmakers...mouthpieces of corporate interests....and the strings of the puppeteers are only visible when a too big to fail scenario takes the spotlight.
The Media for the most part rely on Govt funding or Corporate and Banking interests and will behave accordingly....... The pecking order of small town N.Z. ad nauseum.
So, Christov no changes then - just going in a circle - ohh well how much longer until Takaka - maybe after all - the best thing for New Zealand - have Auckland ties decorated around the long colourful skirts - and exchanges polished shoes with sandals and cars with bikes from China ?
The more difficult our economic environment becomes the more we expect from the government at least to give some strong incentives to the economy. As I described above this isn’t the case.
Bought some new farm implements recently (NZ designed and manufactured, so should please Walter ;-) ). In asking what the freight to the farm cost would be, we were advised that it was $x PLUS a 15% fuel surcharge fee.
In talking to others, the 15% fuel surcharge fee being charged by transporters is now commonplace.
Does this partly explain the increasing cost of groceries?
CO - partly. Most folk don't understand the direct correlation between energy and everything else.
Berlusconi's girl, for instance, presumably ate a (late) breakfast. I cereal, it's 10 calories of oil to 1 of food. If the brekky is meat (don't go there) then she is eating 27 of oil to 1 of food.
Increase the price of oil, she has to bump (sorry) her prices up to cover the increased cost of oil.
This process won't stop now, it'll accelerate.
I wonder how much of Marks & Spence pull back on buying Rissington lamb is just lamb price and how much of it is partly freight costs. Buy the time everyone add their 'cost plus' pricing structure to allow for the 15% fuel surcharge, the end cost is going to increase more than 15% to the end user, even if there is an allowance for some cost increase absorption.
Makes ultra expensive, near useless wind farms a terrible folly, still they could become a source of raw materials when they ultimately fail due to lack of maintenace.
Have you seen www.palmerston-north.info ? Some serious stuff there about how the local council has rorted its own citizens.
Yes, this contract with Mighty River Power would make the Mafia blush.It has been a secret until now and explains why Palmerston North City Council has abandoned all those who will be forced to live right under 40 story turbines. It's a national scandal which the stuffed shirts who run this country have managed to keep out of the media.
TURITEA WIND FARM DEVELOPMENT AGREEMENT
“10.1 Council to support
The Council agrees in its capacity as landowner( and subject to clause 17.2) to :
(a) Support any application by Mighty River for the grant, renewal. Variation or continuation of any Consent necessary to give effect to Mighty River’s rights under this Agreement including consent for the lease;
(b) Support Mighty River’s negotiations with Adjacent Owners, as requested by Mighty River; and
(c) Provide such written evidence of this support (and any consent or approval) as Mighty River may reasonably require.”
and
“The liability of Council (other than in its statutory capacity) for breach of this contract or for any negligent act or omission shall be limited to$3,000,000 in aggregate during the term of this Agreement. This limitation of liability shall not apply to deliberate acts or omissions of Council that breach this Agreement.” (Emphasis added)
Shock horror wind is variable...from this we can conclude that we will have to alter our lifestyles to suit the available energy and not alter the available energy to suit the lifestyle we want...
What you fail to understand is nature does not negoitiate it simply is.....play at Canute all you want....we are entering an energy constrained time frame....
regards
Pretty obvious answer to that one Steve, The thousands of people made to live under this would love to sell up their devalued properties to folks like you who don't know the first thing about dilute, noisy, hopelessly inefficient, wind energy.
VICTORIANS who have endured health problems from a nearby wind farm have been gagged from talking in return for the sale of their land.
Spanish multinational energy company Acciona has been quietly buying farms adjacent to its site at Waubra, near Ballarat, as an increasing number of residents in the tight-knit community complain of the ill-effects of living near turbines.
OMG...or maybe just whinning NIMBYs....I dont think you get it.....in the future any energy no matter how dilute will be a god send.....
Lets see some scientific data on the supposed health issues....oh wait lets also compare those against say a nice place in Japan I know of....or near old coal fired plants, Chna has some great sites.....
regards
Steven, I don't intend to get into a flame war with you, all I did was share with this net community a website about an issue that is of vital concern to a group of close friends. Feel free to find information on the net yourself, you surely don't need me to hold your hand. I haven't lived in the Manawatu for some years, I am a permanent resident in Hong Kong where I live and work. Your quasi religious and rather nasty political beliefs, which you share as random thoughts in your posts, really give me pause as to whether I, like so many other expat New Zealanders, would ever contemplate returning.
That aside, thanks Bernard for this informative website which is forcing New Zealanders to face reality.
OMG : Remember that steven and PDK are so far to the loopy-looney-left , that in their eyes , Sue Bradford is a right-winger !
........ Lucky you , to live and work in Hong Kong...... Totally awesome place ......
Good on yer .
[ Given that HK was once an English territory , is there much excitement there , about the forthcoming Royal Wedding in England ? ]
To be fair GBH...I see them as having two different agendas....one I think is well researched and committed to his beliefs..extreme left or not ,adds value...the other I think loves the look of his own type........ and the joy of a good wallow in his own intellectualism.......
the give away is always in the inability to laugh at one's self....
Cant wait to glimpse the good Prince's ugly consort...if Daddy's fetish has carried in the bloodline.......probably why nobody suspected Camilla in the first place....a case of ...nah your shittin me here............and if Harry's like his dad ...he may have researched dear Kate already to a Royal satisfaction.
True,but any saving will be short term and insignificant compared with other increases in government charges.
State owned electricity generator Meridian today advised me that my power prices are going up 6.5%, 9.1% and 11.8% (depending on the tariff) from the 1st of June.
Errr, when did you last refuel Nicolas? Our "tankful" has increased by at least $15 in the last few months. Which incidentally means that the govt is already getting much more money from each tankful than it used to when petrol prices were lower.
I think it's more the accumulation that is the pb (increased cost of petrol itself, increased GST and potentially the increased fuel tax) rather than the 1.5 cents / l increase alone.
FYI, I have asked Joyce:
How much will the deferment of the fuel tax increase take off forecast tax revenues for the year from July 1? - Or, how much was the increase expected to bring in over the year?
Is this a wise decision seeing as the government is staring down the barrel of a credit rating downgrade? - it will mean less revenue for government than previously expected. Is there a danger Standard & Poor's will not look favourably on this decision? Does the government see any dangers in increasing the fuel tax by 2 cents a litre in 2012 at roughly the same time as households will be facing higher mortgage payments due to rising interest rates? - the Reserve Bank is expected to start raising interest rates in the first quarter next year. You say the government's roading programme will not be "significantly" altered by this. To what extent will it be altered?Alex, save you some time, here is the "unoffical" answer
"By that stage, ordinary Kiwis wont be able to afford to drive, so it wont matter. To ensure that we can still spend billions on roads for me & my mates, we will increase the taxes on poor people (while cutting cutting them for high income earners), increase GST again & sell assets to our mates."
"The package included the cancellation of the economically inefficient regional fuel taxes and their replacement with smaller national increases"
What would the overall reduction in fuel prices be after the cancellation of the regional fuel taxes?
Wouldn't this be an overall saving to the consumer depending on the region they purchase their fuel?
What difference in govt revenue between the 1.5c increase and the regional tax decrease?
Alex - read this. Read it very carefully..
http://crash-watcher.blogspot.com/2011/04/part-6-predicting-regional-an…
Then ask Joyce either to disprove it, or to answer the real question.
"...........instead of living in a world with 4 trillion barrels of total recoverable oil, of which we have only extracted 1.1 trillion barrels, we live in a world with 1.8 barrels, of which we have already extracted 1.1 trillion barrels, leaving only 0.7 trillion barrels left. Instead reaching a production maximum in about 2023, we have already past peak oil three years ago. In a world whose economy is driven by, and whose people are fed with, petroleum, the decline in liquid energy wealth is directly ahead, not a decade or so away.
Despite how bad this sounds, I think that it is even worse for the importing regions of the world, because over this same 20 year period, global net exports will decline from about 13 bbs/yr (35 mbd) to zero. The importing regions will be facing their own declining production, plus, the declining pool of exportable oil, at the same time." Ive been considering H's curve for a while and wondering if in fact the decline is going to be way steeper than thought...ie not 2 to 4% per annum....but at least double that. Net exporting certainly makes it worse, but I think what everyone is assuming is the price will be high because the demand will be there so companies will actually go get whats left and all of it. However when we are looking at irregular demand collapse due to frequent recessions and hence price collapses on a regular basis the resultant average price does not justify the expenditure....ie busineses simply wont risk their $ on ventures that wont pay back...So when we look at the 2.2trillion barrels of oil that are very probably there to recover and have the technology to do so we simply wont because no one will do it.... then of course we will be in a depression where there is no credit available....so like how do you fund getting the oil? simple, you cant/dont. regardsJB- yes, there is a common denominator with god and lignite.
Both require belief, and ignorance.
Me, I prefer to ascertain truths for myself, from first principles.
Your homework today is to Google EROEI. Energy Return on Energy Invested. Having grasped the concept, then find out what EroEI is required to support Business as Usual. Then ask what ERoEI is available (they call it 'At Mine Mouth', even if open-cast) from lignite.
and - 2000 years? That's an indication of lack of intellect. At what rate of consumption is this standalone figure based? A static figure, perchance? No growth, then? (better tell the fiscal folk, they're betting on something differet). No global envy in the end-game?
Homework time, methinks.
Well proven but not very efficient....the problem if you ignore CO2 and AGW etc is the energy you have to put into make a transportable fuel....I recall there is some articles on doing just that.....need to read up on them to comment further....
A1-jet, again its not cost effective to run an airline on the scale we run airlines on today....when you power them on Jey fuel thats $170USD+....even $200USD+...most ppl cant afford the fairs...
The hardest thing when you look at our complex society is fixuring out the numerous linkages between everything and the degree on effect of that linkage....
regards
It's simple really. Less income means less money to pay for services. Less money means cuts to health, education, justice, transportation etc. More cuts mean greater opportunity for private enterprise and multinational corporations to come in and take over services as profit making concerns.
That folks, is John Key's manifesto.
not really I suspect. I guess its possible with PPPs etc that the Govn hands a private entity a state sanctioned monoploy, who then proceed to screw ppl over....just how long would that Govn last though? The great thing about democracy is of course the next Govn can reverse it.....simply nationalise....pay cents on the dollar....no one in their right mind would come back next time....
Sure less public services and thats probale IMHO, but simply, ppl wont have the $ to buy private offerings either...
regards
It seems to me we need to de-urbanise given the infrastructure needs of our two largest centres of population seem to presently be devouring the national economy. Surely there is excess capacity in the provinces which is under-utilised. The Chch situation has most likely worsened the over-population of Auckland and surrounds. This is all getting much worse.
The Government has definitely lost its way. No plan whatsoever.
Now People .... the GOVT is not going through with this increase, not because they don't want to.
It is because THEY and the OIL CO'S co's know, that once the price per litre (91) goes past the highest price ever @ $2.18.9 the sh*t will hit the fan and the media will be all over it, with headlines like " Petrol at its hightest price ever", "Can we afford these increases", "Consumer Confidence Slides as Fuel Increase the Final Straw" etc etc.
So this move by the govt was TOTALLY POLITICAL .... election year this year, isn't it ?
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