Govt postpones fuel tax hike

Transport Minister Stephen Joyce announced this afternoon the 1.5 cent per litre increase due to come into effect on July 1 had been deferred. File photo / Hawke's Bay Today

A planned fuel tax increase has been postponed by the Government because of "tight" economic conditions and the cost of the Christchurch earthquake recovery.

Transport Minister Stephen Joyce announced this afternoon the 1.5 cent per litre increase due to come into effect on July 1 had been deferred.

He said the move made sense amid the ongoing impact of the global recession and the Christchurch earthquakes.

"The government's $11 billion roading programme will 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."

The planned fuel tax increase was part of a suite of changes aimed at funding transport upgrades announced by Government in March 2009.

Government officials are working on the next Government Policy Statement for Land Transport Funding (GPS), which will set 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.

Mr Joyce 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."