Cost of living: Where the $718 million for fuel tax cuts will come from

Finance Minister Grant Robertson has revealed how he paid for the $718 million extension to petrol tax, road user charge, and public transport subsidies.

The money comes from funding that had been set aside mainly for Covid-19-related costs, but not spent or not anticipated to be spent in the future.

Robertson had said earlier the money or the extension of subsidies had come from the “savings that were identified in the October baseline update”.

“The purpose of the update, which is carried out every six months, is to look at money previously allocated and see whether that funding is still required. This process allowed us to find sufficient funding to be able to fund the extension. We will continue to look through the Budget process to identify the best ways to continue supporting New Zealanders with the cost of living,” he said.

He has since released a breakdown of those savings, which work out at about 1 per cent of the entire Crown’s expenditure this year.

Overall $1.199.6b worth of savings were identified, the lion’s share came from the Small Business Cashflow Scheme.

This was a Covid-19-era policy which loaned money at cheap interest rates to small businesses affected by the pandemic and offered an attractive interest-free loan period.

It was rolled out in 2020 after a another loan scheme, which involved the Government effectively underwriting private lenders, failed to reach enough businesses.

In 2020, the scheme was costed at $5.2b. By the end of that year 100,000 business had borrowed money under the scheme.

A further $258m was reallocated from MIQ and $128m from the Event Transition Support Scheme, a policy designed to support the events industry, which had been hit hard by Covid-19.

A further $102m was saved from other miscellaneous initiatives.

On Thursday, the Opposition had called on Robertson to be transparent about where the additional money had come from.

National’s finance spokeswoman, Nicola Willis, said the quantum of funding was so large the Government should be more upfront about where the money was coming from.

“$700m is an awful lot to find down the back of the couch, which is essentially what has happened here,” Willis said.

“The Finance Minister, in order to preserve his own and the Government’s economic credibility, must be transparent about where that money has been found.”

Act leader David Seymour had invoked the spectre of Ihumātao, when the Government was found to have unlawfully allocated money as part of a land deal.

“The very basis of our democracy is that the Government can’t take money without the permission of Parliament,” he said.

“If the Government can’t front up to Parliament and say where it is coming from that is illegal.”

He noted that the money for the $29.9m Ihumātao land deal was found to have been spent unlawfully, requiring the Government to pass legislation to retrospectively appropriate the money legally.