Cost of living: Fuel tax subsidy to end in June, Finance Minister Grant Robertson confirms

The fuel tax subsidy which has helped New Zealanders ease their costs at the petrol pump for almost a year will end in June, the Minister of Finance has confirmed.

Talking to Tim Dower on the Mike Hosking Breakfast, Grant Robertson discussed the upcoming budget for 2023 and said the petrol subsidy would not be part of the deal.

“We said [the subsidy] will come to an end and it will come to an end in June.

“We do have to move through these emergency measures, but many New Zealanders would be grateful for having that burden eased, but we have to get a balance here and that’s what we’re doing.”

In March 2022, the Government cut 25 cents a litre from fuel taxes, and an equivalent amount from road user charges in response to a spike in the cost of fuel following Russia’s invasion of Ukraine.

Robertson discussed the upcoming budget for 2023 and said the petrol subsidy would not be part of the deal. Photo / Mark Mitchell

This subsidy was extended in the May Budget, and extended again and was due to expire at the end of January this year.

Then in December, the Government made the call to extend the full subsidy until the end of February, before halving the cut to 12.5 cents a litre until March 31.

Once more, an announcement was made in February that the fuel tax cuts would continue until June 30, when Robertson has confirmed the subsidy will finally come to an end.

Prime Minister Chris Hipkins made the announcement in February that fuel tax cuts were something his Government could offer as quick and easy support in the short term for struggling families.

“It’s been a lot,” he said whilst evaluating flood damage in Auckland at the time.

“And it’s been a lot on the top of the last few years, first with Covid and then the economic tail caused by that. So I get that households are thinking hard about their budgets and businesses about their costs.”

In December the Government decided to extend the full subsidy until the end of February, before halving the cut to 12.5 cents a litre until March. Photo / Duncan Brown

Hipkins said it would help take the edge off high fuel costs which put pressure on families and those on fixed incomes who often had no choice but to fill up their cars.

In March, a report was submitted by officials to Government which suggested that a more targeted, lower-cost option would be a preferable approach to helping New Zealanders at the pump.

Now this morning, with eyes on the May Budget, Robertson said the Government needed to produce a budget that reflected more careful spending of taxpayer cash.

“We’ve got to turn out a fiscally careful budget, to get ourselves back towards a surplus.

“That’s challenging as we had that high number of Covid spending and if we turned the tap off on all these things overnight, that would be what we call an austerity budget which would have a significant impact on housing, education and health and so on.”

Robertson said Labour would need to strike a balance to bring spending down to “normal levels”, but support the country’s needs for the coming year.

The minister referred to petrol as a fixed and unavoidable cost.

“You’ve got to get to work, you have to get the kids to school, and I think more of the middle-income people who find themselves in that position over the last year or so...will have been grateful for having that burden eased.

“We have to get a balance here, and that’s what we’re doing.”