KEY POINTS:
The Government will push ahead with legislation allowing regional fuel taxes, but will not agree to a "full" tax immediately, Finance Minister Michael Cullen says.
His comments follow Prime Minister Helen Clark today saying a 5c a litre Auckland regional petrol tax would not go ahead next year.
The Land Transport Management Amendment Bill which would allow regional councils to levy a fuel tax of up to 10c per litre is currently before Parliament.
Dr Cullen today said the Government remained keen to pass the bill, but any petrol tax would have to be phased in over a period of years so that the initial impact was very small on the motorists and the household budget.
The tax is being floated as a way of partly paying for the electrification of Auckland's rail network.
Dr Cullen said that without the regional petrol tax electrification could not happen.
"It would be quite a bad response to the prospect of oil prices remaining very high and challenges around climate change to actually be abandoning one of the major programmes to deal with those issues in the Auckland area."
The aim was not just the electrification of the current rail network but also there was the potential over the long-term for extending that network, he said.
"Without electrification we can't build the Britomart loop and we can't even consider having tunnels going underneath, it doesn't make sense in the modern world.
"We can build much cheaper tunnels if we've got electrification than without."
Helen Clark today said a 5c a litre regional fuel tax would not go ahead in Auckland next year.
"I can assure you that any suggestion of the Auckland region slapping 5c on the petrol next year is absolutely ridiculous. It's not going to happen," she said on TVNZ's Breakfast programme.
Asked if the Government would stop any proposal along those lines, Miss Clark pointed out that any regional tax would need the Government's sign off.
NZPA understands the Government would still consider a regional fuel tax at a lower level.
The comments follow Energy Minister David Parker yesterday confirming the Government is considering delaying the implementation of parts of the emissions trading scheme (ETS) to cushion its impact on petrol prices.
He today reiterated a delay in the phase-in of the emissions trading scheme on petrol was a possibility, as the Government took rising petrol and food prices into account, but the overall shape of the scheme was likely to stay.
"The really important point is that we actually have a marginal cost for increases in emissions by the end of 2012 across all sectors, so we are not proposing to change that fundamental design prescription," Mr Parker said on Radio New Zealand.
"But in terms of the phase-in for the transport sector that is something we and the select committee are both looking at."
Mr Parker said he was still in favour of proceeding with a mandatory level of biofuels - contained in another piece of legislation - but no final decisions had been made.
The added cost of the Government's Biofuel Bill has been estimated at about 7c on a litre of petrol, but Mr Parker said he believed the cost would be lower.
The Government's Climate Change (Emissions Trade and Renewable Preference) Bill is being considered by a select committee at the moment.
The bill aims to set up the ETS under which all sectors of the economy would face limits on how much planet-warming greenhouse gas they emit or pay the cost if they breached them.
Mr Parker yesterday said the ETS was still needed to manage emissions down and there were costs to not tackling emissions.
Last week it was reported officials were doing work on changes that would allow concessions for companies that could prove the scheme would significantly disadvantage them against their international competition.
Mr Parker said the Government had always been open to talking about the issue.
Green Party co-leader Russel Norman said he was worried the Government would backslide on the ETS and regional petrol taxes.
The way to address rising costs was targeted assistance for the most vulnerable and for the ETS to be applied across all sectors and remove phasing in for agriculture.
Last week three critical reports and a government report into the scheme were released.
Parliament's finance select committee is due to report back on the legislation by June 10 and the Government could struggle to get support for the scheme in its current form.
Commerce Minister Lianne Dalziel also announced yesterday the Government was looking into tougher monitoring of how petrol companies set their prices.
- NZPA
