Despite repeatedly ruling out another extension as too expensive, the Government has again relented at the last minute, extending the 25c/litre fuel levy cut set up after Russia invaded Ukraine for a fourth time to the end of June.
Extending it for a fifth time from then just three months before the October 14 election now seems a sure thing, along with disbelief at any further rulings out.
Half-price public transport was also extended until the end of June, and will be permanently half-price for those with Community Service Cards, including tertiary students, from July 1.
New Prime Minister Chris Hipkins made the announcement in Auckland after visiting a relief centre in Mangere catering for people flooded out of their homes by the most expensive climate change disaster in our history. Hipkins was repeatedly challenged at a news conference to justify the extension of subsidies to create more climate emissions by burning petrol and diesel when the effects of climate change had just proved so disastrous.
“The Government has an extensive climate change programme underway. We’re absolutely focused on reducing emissions. The public transport (fare) reductions, for example, that we’ve put in place today, are a positive step in terms of getting more people into public transport,” Hipkins said.
“And we’ve got extensive work going on around the electrification of the vehicle fleet. We’ve got a lot of work happening to reduce our emissions overall as a country in the electricity generation space,” he said.
“But we also have to acknowledge that right here and right now, that increase in fuel costs is putting a significant amount of pressure on families who have no choice but to continue to fill up the car.”
Hipkins repeatedly went back to his initial comments as PM that he wanted to focus the Government on ‘bread and butter’ issues.
“I’ve said bread and butter issues like the cost of living would be my top priority. This is our first step in dealing with some of the persistent cost pressures on businesses and families,” he said.
“Reducing the cost of fuel excise and public transport is a good candidate for early action – it’s a major cost for nearly everyone, we know how to do it, and can roll it out quickly,” he said.
“It is a small and meaningful first step in an ongoing series of measures to help with some of the persistent cost pressures on businesses and families.
“The floods in Auckland and Northland are putting extra stress and financial pressure on families. Cutting fuel excise and keeping half price public transport gives some extra relief as Auckland goes through a difficult period.”
Finance Minister Grant Robertson said the extended nature of higher inflation justified the fuel tax cut extension.
“It is also a good policy for business. The cost of freight and running car fleets is a big cost for many businesses, so this extension helps relieve a bit of pressure on those doing it tough right now,” he said.
The extension will reduce headline inflation by 0.5% in the June 2022 quarter, although the Reserve Bank is supposed to ‘look through’ such one-off policy changes. Robertson estimated the extension of all measures would cost about $718 million.
“We can strike a balance between targeted ongoing support and careful management of the Government accounts. We are paying for the extension from savings identified in the most recent baseline update,” he said.
“This extension takes us to the end of the financial year. We have already indicated that the Budget will have a cost of living focus, and this extension covers the time until that comes into force.”
Transport Minister Michael Wood said diesel drivers had already pre-purchased Road User Charges to cover them for the coming month, which would provide time for fresh legislation to reintroduce the discount until June 30.
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