Cash flow to Government slows as drivers cut back

Motorists are buying smaller cars, switching to diesel and - in smaller numbers - catching trains and buses to dodge skyrocketing petrol prices.

The combined effect has cut the revenue flow into the Government's petrol tax account by 4 per cent in the past six months, according to Labour Party president and Transit NZ board member Mike Williams at an Auckland City Council committee meeting this week.

Next Thursday's Budget is expected to shift money out of general funds into roading to make up the shortfall.

Small-car sales have jumped 22 per cent so far this year and larger car sales are down 10 per cent.

Petrol deliveries to service stations dropped by 3.7 per cent in the last half of last year, but diesel deliveries rose - also by 3.7 per cent.

Rail trips in Auckland leaped 39 per cent in March from the same month last year. Stagecoach bus trips so far this year are up 4 per cent in Wellington and 7 to 8 per cent in the Hutt Valley, but the company's patronage in Auckland has merely "flattened out" after dropping in the past two years.

"There has been a small level of growth in April. We haven't been in that situation for three years," said the company's commercial director, Ian Turner.

Stagecoach has lost market share in Auckland both to the improving rail service and to smaller rivals such as Howick and Eastern Buses, whose passengers are up 4 per cent from this time last year.

"We are getting a small increase which we believe is a result of the fuel prices," said Howick chief executive Bill Dalbeth.

"We expected more. It's been slow."

Petrol prices have risen 80 per cent in the past three years, from 95c for a litre of 91-octane petrol in May 2003 to $1.71 yesterday.

Despite this, petrol deliveries to service stations kept on rising through 2004 and have dropped only in the past year as tensions in the Middle East and last August's hurricane in New Orleans drove world oil prices to new records.

Although the effect was delayed, consumers are now reacting more strongly than Treasury tax forecasters expected. Petrol tax revenue was 2.9 per cent less than predicted in the nine months to the end of March, and road user charges, mainly from diesel vehicles, were 4.3 per cent below forecast.

Automobile Association policy manager Mike Noon said motorists were switching to more fuel-efficient cars.

"If you are looking at changing your car, then think about what you primarily want to use it for," he said.

"Don't buy the car that you need when you go on holiday. It might be better to get a smaller car and tow a trailer when you go away."

He said a new "fuelsaver" website launched by the Government yesterday showed other savings could be made - up to 50 per cent less fuel use through smoother driving, better maintenance, correct tyre pressure and cutting out air conditioning and roof racks.

"The faster you go, the more it costs. If you start travelling at over 100km/h, you really fuel up," he said.

AA research editor Peter King said the continuing trend towards diesel vehicles made less sense now than it used to.

"At the pump it looks cheaper, but when you factor in the road user charges it's not so attractive," he said.

Diesel at present sells at $1.29 a litre compared with $1.71 for petrol. Allowing for road user charges, the fuelsaver website calculates that someone driving 10,000km a year would spend $1540 on diesel compared with $1620 for 91-octane petrol.

But Mr King said that theoretical advantage was usually outweighed in practice by the fact that most diesel engines were bigger.

"When people are driving a three-litre turbo diesel or a two-litre car, it's that kind of substitution they are thinking about.

"It's always going to be cheaper to drive a small-engine vehicle."

A survey of AA members in March found that 37 per cent were making fewer "pleasure" trips to save petrol, 35 per cent were driving less often, 20 per cent were walking more, 18 per cent were driving more smoothly and just 7 per cent were using public transport more often.