As fuel prices remain high Aucklanders voice their opinions to the Government's move to halve the price of public transport. Video / NZ Herald
A major fuel company says it has dropped fuel prices by 29 cents a litre overnight, as motorists enjoy an extra four cents GST removal on top of the Government's 25c-a-litre tax cut.
The cuts have been labelled a "game-changer" by Gull boss Dave Bodger, who says motorists may face even further drops in price.
Prime Minister Jacinda Ardern finally budged yesterday on the cost of living crisis, addressing Kiwis' pain at the pump, while also cutting road user charges and halving public transport fares.
The about-face came as the Prime Minister admitted there was a cost of living crisis in New Zealand - something she had been reluctant to do last week, although she maintained the drivers of rising costs were from offshore, and not the fault of her Government.
The changes are for just three months at this stage, although Ardern and Finance Minister Grant Robertson suggesting the Budget, due in May, could make lower public transport fares permanent.
LISTEN LIVE TO NEWSTALK ZB 7.35am: Energy Minister Megan Woods
The fuel excise changes took effect as of midnight last night (the public transport changes will come on April 1), but at least one fuel retailer, Mobil, took the opportunity to drop its prices almost immediately. When GST is included, the cut totals 29 cents a litre.
Ardern said the changes would mean savings of "$11 a tank to $17 a tank."
She added she hoped the public transport fare cut would give people the opportunity to leave the car at home.
For nearly a week the Prime Minister refused to admit there was a cost-of-living crisis. Photo / RNZ
"We are also making it cheaper for those who catch a bus or a train. In the long term we need to build greater resilience into our transport system so we are less vulnerable to spikes in the price of petrol, but for now halving the cost of public transport will provide some families with an alternative to filling up the tank," Ardern said.
She said the crisis in Ukraine had brought about a "global energy crisis".
Ardern said that while the crisis was not the responsibility of the Government, it would try to alleviate some of its most immediate costs.
"We cannot control the war in Ukraine nor the continued volatility of fuel prices, but we can take steps to reduce the impact on New Zealand families," Ardern said.
Fuel tax cut 'huge for the public'
Gull NZ General Manager Dave Bodger told Newstalk ZB's Mike Hosking the 29 cent reduction on fuel prices was a "game changer".
The 25 cent reduction, plus GST, totalled a 29 cent reduction on petrol, which was "huge for the public", Bodger said.
As a general rule he said a dollar a barrel amounted to a cent per litre, with a cent on the freight exchange amounting to a cent per litre.
Asked for his predictions on how prices would pan out, he said they had been "zig-zagging all over the place".
He said things would get better if there was peace in the Ukraine, whereas escalation would be bad news for fuel prices.
"For those of us old enough to remember the Gulf War, it went through the roof and then it recovered afterwards," he said.
"Lets hope it's the same this time."
Bodger told RNZ after hearing the announcement yesterday, Gull pre-loaded the price to reduce the cost of petrol by 29c a litre from midnight.
The price cut had been passed on at its approximately 80 sites where it controlled the retail price, and it was also speaking with its independent sites who had already paid a higher price for fuel to see how it could provide a rebate.
Prior to the announcement, one of its sites was only charging $3.03 a litre for 91, so the reduction of 25 cents plus GST lowered the price to $2.73.
Gull didn't increase prices on Friday because they could see the refined price out of Singapore going on a zig zag trend of "up, up, down, up, down".
"Hopefully if that continues on a downward trend we can pass more onto the motorist."
Bodger said Gull would be looking to do whatever it could following Minister Wood's request to provide a seven day rolling average of its margins, but he wasn't sure it could do it in the specific way they had asked for it.
In his 30 years in the oil industry, these were the highest prices he had seen, Bodger said.
Minister: Lots of families doing it tough
Energy Minister Megan Woods said the 25 cent reduction in fuel costs would "make a material difference to people's household budget".
Woods told Newstalk ZB's Mike Hosking while Government doesn't have total control of fuel prices, the bit they were responsible for was excise tax.
"We've recognized that a lot of families are doing it tough, we're doing our best to alleviate that."
Minister of Energy and Resources Megan Woods said the 25 cent reduction in fuel costs would "make a material difference to people's household budget". Photo / Mark Mitchell
Woods recognised there was a lot of volatility in the market, with the price per barrel going down overnight.
She suspected this was due to a fall in global demand from China going back into lockdown, and renewed hopes that diplomatic talks would bring an end to the war in Ukraine.
While the change in road user charge was not immediate, work would be done on it this week.
She said the package was designed to reduce some of the anxiety and uncertainty around fuel prices but would only be for three months at this stage.
She said it would be monitored over the next three months and government would discuss the best way to phase it out.
"We don't want people to wake up one morning and bang, it's 25 cents more."
"The hope is we will have seen things stabilize in that time."
Woods told RNZ the country isn't short of petrol, but the issue was pricing.
On the Government requesting the seven day average data from the gas companies, officials would work with them about what they could get in order for them to monitor it and make sure the cuts was being passed onto consumers.
"What we have to ensure is that any price rise isn't an increase in the profit margins of the fuel companies."
Woods said all the fuel companies she had spoken to were happy to provide that information. The Government wanted to publish that data, so may have to make a change to the information disclosure regulation.
The information would not be released by company but by industry, she said.
"People are feeling this now, we needed to get this relief into people's pockets now."
Grey Power president Jan Pentecost said reducing the cost of petrol would help its members "a little".
"Everything helps I'm sure".
Speaking to RNZ, she said the halving the cost of public transport probably wouldn't make a difference because for people living in urban areas they could often get free travel at certain times using their Gold Cards anyway.
Pentecost said she would have rather have seen a further increase in superannuation payments to give some of the more vulnerable older people a little bit more discretionary money so they had a little bit more in their pockets.
PM's difficult week
Ardern's announcement capped off one of the most difficult weeks in this Government's history, which began with leader Christopher Luxon promising a $1.7 billion tax cut package, progressed to National pulling ahead in a poll for the first time in two years, and ended in the unedifying spectacle of Ardern denying there was a cost-of-living crisis.
On Monday, Ardern was even forced to answer, whether, on the back of that poll, she planned to stick around for the next election - a question usually directed at struggling National leaders (she said she would contest the election, shrugging off the poll result).
National had been calling on the Government to permanently axe Auckland's regional fuel tax of 10 cents a litre plus GST - although last week National deputy leader Nicola Willis refused to go as far as calling for fuel exise, which applies nationally, to go as well.
National stuck to its guns on Monday, with leader Christopher Luxon saying the "petrol tax tweaks will provide some relief but don't address the wider cost-of-living crisis that Kiwis across the country are facing".
He reiterated his call for the Auckland regional fuel tax to go, as well as a raft of other Labour taxes.
National leader Christopher Luxon has called on the Government to axe Auckland's regional fuel tax. Photo / Mark Mitchell
"It's good that the Government has finally accepted there is a cost-of-living crisis in New Zealand. But now they need to address it," Luxon said.
Auckland Mayor Phil Goff said he still backed the tax.
"Suspending the regional fuel tax in current circumstances would worsen the crisis Auckland Transport faces with the loss of hundreds of millions of dollars in public transport fares because of Covid, while construction costs for new infrastructure and operating costs are rising rapidly," Goff said.
"Any reduction in revenue in these circumstances would result in suspension of projects like the Eastern Busway and would not only delay their delivery, but also result in ultimately much higher costs," he said.
He also warned the loss of revenue would mean "less ability to borrow within debt to revenue constraints".
But one of the candidates vying to replace him, Viv Beck said she would get rid of the tax within 12 months of becoming mayor, saying the tax was "hurting Aucklanders at a time when families across the city are already feeling the pinch."
Act Leader David Seymour called for the Government to go even further, saying the $4.5b expected to be raised in Emissions Trading Scheme receipts over the years to 2025/26 should be recycled back to consumers as a climate dividend.
"The Carbon Tax Refund would take each year's revenue from ETS auctions and divide it by the population. Every adult would receive a reduction in their tax bill by that amount, plus their dependent children's share," Seymour said.
Outgoing Auckland mayor Phil Goff is sticking by the Auckland regional fuel tax. Photo / Dean Purcell.
Not every party backed the cuts.
The Greens cautioned against cutting the fuel taxes, with co-leader James Shaw saying he would have preferred "direct payments to people through the welfare system or via a tax credit".
Energy Minister Megan Woods said she'd be keeping an eye on fuel retailers to make sure they pass the cut on to consumers.
She said she is now "seeking daily information disclosure from fuel companies of their rolling seven-day average fuel margins, to monitor industry profits".
Woods said she would like the fuel companies to give up that information voluntarily, but she suggested that if they did not, she might use new fuel pricing legislation to force it from them.
The move would reduce fuel excise duty, the main tax on petrol to lower than when the Government took office. The current Government raised it by 10.5c.
Fuel taxes and road user charges are paid directly to Waka Kotahi - NZ Transport Agency, which spends the money on maintaining the road network, building new roads, and subsidising public transport.
The Government would make up for the revenue lost as a result of the cuts to fuel taxes and road user charges by giving Waka Kotahi a grant from the Covid fund of about $350m.
Robertson said this cost would be met through "savings and reprioritisation".
"This means we can continue the Government's record investment into transport infrastructure without having to cut projects," he said.
'I'm worried it isn't a big enough cut'
Nelson-based beneficiary advocate Kay Brereton said reducing fuel prices was part of the puzzle to assist those who were struggling and she really hopes it helps.
She told RNZ halving the cost of public transport was a really good boost and would help a lot of people, but worried the petrol drop didn't go far enough as the cuts only took the price back to last Monday.
"This will work if it impacts food prices as well and food prices start to come down because we've watched them rising and we've watched them rising in part because of fuel.
"I'm worried that it isn't a big enough cut to make a big enough difference for some people."
Brereton said some people were starting to think they wouldn't be able to afford to pay for petrol to get to work and she wasn't sure this was a big enough fix to address it.
Despite the cuts, petrol at her local gas station was still only just under $3 a litre.
The high price of food still worried her and she said they still needed to see it come down alongside fuel and road user charges as all of those things combined would help people.
"As a consumer I've always found that really frustrating that we pay the export price for something we are keeping in the country... I wonder about an intervention, I wonder about GST. I think people are quite disappointed that there won't be big changes to how the supermarkets are operating because that's where we've seen..."
"It's the price of fresh fruit and vegetables and in season fresh fruit and veges that I'm really noticing - things like cabbages and cauliflower."
Manukau Urban Maori Authority chair Bernie O'Donnell said over the past few months they have noticed people who have been working all their lives now struggle to make ends meet.
He called this group the working-class poor and said up to 70 per cent of working families' incomes was going towards just rent alone.
Speaking to TVNZ's Breakfast he said one person's crisis is another's norm.
He said the families and communities he works with have lived under the bread line and in poverty for decades.
"When someone says this is a crisis, I want to know why all of sudden it's a crisis because we've been talking about this for years, we've been talking about the struggle of our people," said O'Donnell.
He said even five vegetables a day is out of reach for some families and that for some it was cheaper to buy takeaways which impacts their health.
"We've been banging on about this for close to four years."
He called for a solution approach like 'Smokefree 2025' such as 'Poverty free 2045'.
He said he appreciated the Government's efforts to bring back petrol costs.
"But mind you, when it's $3 everyone is jumping up and down that it's too expensive but we were talking about it when it was $2.30 and that it was just beyond the means of our whanau."
