· Petrol excise duty and road user charges both cut by 25 cents a litre for three months
· Additional reporting to support expectation that the full amount of tax reduction will be passed on to consumers at the pump
· Public transport fares cut in half for three months to provide cheaper transport options
· Government to top up lost revenue to Land Transport Fund to ensure all currently funded transport projects will not be affected
· Temporary measures form part of a cost of living relief package that includes April 1 income increases for majority of New Zealand households
· Almost 60% of families to get an increase to Working for Families of on average $20, Superannuation to increase $52 per fortnight for a single person and $80 for a couple, and benefits to increase up to a further $35 a week
· Winter Energy Payment to re-start on May 1 providing $31.82 a week for couples, and people with dependent children – a total of $700 over winter
The Government will cut 25 cents a litre off fuel for three months as part of a cost of living package aimed at giving Kiwi families immediate relief through the current global energy crisis triggered by the war in Ukraine, Prime Minister Jacinda Ardern announced today.
Fuel excise duties and road user chargers will be reduced by 25 cents each and the price of public transport will be halved as part of a package of measures to reduce transport cost pressures on middle and low income households.
“We cannot control the war in Ukraine nor the continued volatility of fuel prices but we can take steps to reduce the impact on New Zealand families,” Ardern said in a media release this afternoon.
“Just as it was our job to get New Zealand through the Covid-19 health crisis it’s also our job to put in place a plan to get us through the global energy crisis too.
“There’s no silver bullet that will fix the cost of living, but we have a plan and are implementing a range of measures that together will help to make a difference.
“The global energy crisis has quickly become acute which is why the Government has stepped in to cut fuel duty. Today’s changes will reduce the cost of filling up a 40 litre tank of petrol by over $11, and for a 60 litre tank, over $17.
“We are also making it cheaper for those who catch a bus or a train. In the long term we need to build greater resilience into our transport system so we are less vulnerable to spikes in the price of petrol, but for now halving the cost public transport will provide some families with an alternative to filling up the tank.
In addition, on April 1 she announced a suite of permanent increases to household incomes will see 60 per cent of families earning more from Working for Families, as well as increases to superannuation and benefits. On May 1, one million New Zealanders will also start receiving the Winter Energy Payment which will provide $30 a week extra to many.
“While forecasters predict inflation will peak and subside over the coming year, there is less certainty around fuel costs due to the volatility of Russia’s invasion of Ukraine,” Ardern said.
“One thing we do know, is that the extraordinary increases we’ve seen in recent weeks impact on everything – from the ability of people to get to and from work, to the cost of supplying goods and services, and so we must act to support New Zealanders to get through.
Finance Minister Grant Robertson said the fuel excise cut is the most efficient and direct way to help Kiwis now.
“We are amid a global energy shock and a spike in prices at the pump is being felt by the whole world, including more than a 15 per cent increase in the cost of 91 here in New Zealand between the start of the year and last week,” Grant Robertson said.
“Reducing FED is the quickest move we can make and it will be confirmed by an Order in Council that will come into effect tonight.
“Due to the nature of RUC, officials are working through a number of options to make sure support flows in a timely way, and the Transport Minister will be setting out the details for how we will support RUC payers in the coming days.
“The estimated cost of this cut over three month period is about $350 million for the fuel tax changes. This will mean reduced revenue for the National Land Transport Fund, which funds our investment in roads and other transport infrastructure. We will be meeting the costs of this through savings and reprioritisation from the Covid Response and Recovery Fund. This means we can continue the Government’s record investment into transport infrastructure without having to cut projects.
“We do need to recognise that petrol prices are expected to continue to rise. The Russian invasion of Ukraine is continuing to undermine and de-stabilise global energy markets and, added to the other inflationary pressures the world has due to Covid supply chain disruptions, this is sadly not over yet.
“That is why we will review the situation over the coming months. We will also outline in the coming days the means by which we will reverse the changes being announced today. It is likely that this will be a gradual phase down in line with global oil prices stabilising and reducing, to keep pressure off families while recognising the need to return to more stable funding for our transport infrastructure.
“Further, in the Budget in May, we will progress work to ensure we are not at the whim of international oil prices in future, through greater investment from the Climate Emergency Response Fund. These investments will boost our plans for New Zealand to increase energy security and independence by decarbonising our transport fleet and reducing our reliance on volatile global energy markets.”
Minister of Energy and Resources Megan Woods is writing to fuel companies today, setting out an expectation that the full amount of tax reduction from the Government will be passed on to consumers at the pump.
“In addition I am seeking daily information disclosure from fuel companies of their rolling seven-day average fuel margins, to monitor industry profits,” Megan Woods said.
“Our preference is that fuel companies volunteer this information and I am asking them to do that. But under the Fuel Industry Act we passed in 2020, there are options to pursue more data disclosure, and further measures to ensure the discounted excise duty is not being absorbed into company profits.”
Government fuel price announcement welcomed
Auckland Mayor Phil Goff has welcomed the short-term relief from fuel prices announced by the government this afternoon, and that it will not come at the cost of reduced investment in needed transport infrastructure in Auckland.
“The Ukraine invasion’s impact on sharp rises in fuel prices is hurting in particular lower and fixed income households. They will welcome the partial relief that the drop in Road User Charges and excise duties will provide, albeit in the short term.
“However, it is equally important that we keep up the investment in our transport infrastructure so that we continue to address the twin problems of congestion and carbon emissions. The government’s proposal enables both goals to be achieved.
“I also welcome the government’s decision to provide subsidies to halve public transport fares for the next three months. This is particularly important to help people look to public transport as an alternative way to travel with cheaper fares and to enable them to avoid the higher fuel costs that the international oil shock has created.
“This will also help a faster return to public transport after the sharp fall in patronage caused by the pandemic and help partially offset the funding problems this has in turn caused for Auckland Transport and Auckland Council.”
Excise tweaks don’t fix wider cost of living crisis
The Government’s petrol tax tweaks will provide some relief but don’t address the wider cost of living crisis that Kiwis across the country are facing, Opposition Leader Christopher Luxon says.
“It’s good that the Government has finally accepted there is a cost of living crisis in New Zealand. But now they need to address it.
“It’s not just petrol prices that are going up. Food prices are up more than 13 per cent and weekly rent is up $150.
“And rampant inflation means Kiwis are paying more income tax, despite going backwards under Labour.
“People deserve a break. The best way to do that is to adjust tax thresholds to return the extra tax Labour are grabbing through inflation. This would see the average earner keep an extra $870 a year.
“Until now, all Labour has done since they came into office is increase taxes. There’s the regional fuel tax, the brightline extension, the removal of interest deductibility on rentals, the new 39 per cent income tax rate, the proposed light rail tax and the latest jobs tax proposal.
“National would allow hard working Kiwis to keep more of what they earn.”
