He said if the Government allowed the 25 cent charge to elapse, fuel would be “back in the $3 mark” - noting that the 25 cent a litre cut did not include GST. Including GST, the Government actually cut 29 cents off the price of a litre of fuel.
Collins warned the effects of the cut were not just limited to people filling up their cars, but would flow through into the cost of goods like groceries.
“Over 95 per cent of freight movements are done by truck - that uses diesel, tractors use it on a farm. Everything relies upon diesel - it is a huge inflationary pressure,” Collins said.
He noted that in the coming months and next year, sanctions on ships taking fuel out of Russia, and sanctions on types of fuel leaving Russia would continue to put upward pressure on prices.
Ia Ara Aotearoa Transporting New Zealand called for certainty one way or another, but warned that putting the tax back to its normal level would increase the cost of goods.
Chief executive Nick Leggett warned that “if road user charges and fuel excise go up as the Government plans from January 31, then the price of all our household goods and food carried by trucks will go up too”.
Leggett pointed to a Government commitment to phase out fossil fuel subsidies, signed by Trade Minister Damien O’Connor earlier this month, as suggesting the Government might allow the policy to expire in January.
“It seems to me that they can’t sign this agreement on the one hand and then pretend that they haven’t made a decision on the continuation of the much-needed cost-of-living support package. Which one is it? Cash-strapped New Zealanders deserve some certainty,” Leggett said.
“If they have made a decision that they intend to ramp up the cost of living again, at least be honest about it right now so people can start adjusting their holiday budgets now,” he said.
It’s not just drivers that want the cuts extended, public transport users also want the Government’s half-price fares policy extended beyond its expiry in January.
Free Fares organiser Steve Maran launched a petition earlier this month to keep the policy in place permanently.
“Permanent half-price fares for everyone will help ease the cost of living, and ensure that high patronage remains through next year and into the future,” Maran said.
The cuts to taxes and public transport fares were first announced in March and lopped 25 cents a litre in petrol tax off the price of fuel. An equivalent amount of road user charge was also cut. Those taxes flow into the coffers of Waka Kotahi-NZ Transport Agency to spend mainly on maintaining roads and building new ones. The last five-month extension was estimated to cost the Government $589 million to top up Waka Kotahi’s fund for the money it lost from the tax cut.
The cut is paired with the Government’s half-price public transport policy, which tops up public transport subsidies with public money to reduce fares to half their normal rate.
Currently, the assistance plan is set to expire at the end of January, but the Government has held the door open to further extensions if necessary.
Robertson reiterated that position on Thursday, saying the Government had “no plan” to change the end date.
“What we’ve always said is we’ll look at the evidence, we’ll look at what’s in front of us, but we don’t have any plan to change the end date.”
Taxpayers’ Union campaigns manager Callum Purves backed an extension, saying the original cut was “the right call”.
“But things have got worse since then - not better. To hike the fuel tax back up in January with inflation still above 7 per cent would hit families hard.
“To go back to a situation where 52 per cent of the pump price is taxes and levies is a bad idea full stop, but the Government should at least commit to extending the fuel tax cut until inflation is back under control,” Purves said.
The Reserve Bank is meant to keep annual inflation between 1 and 3 per cent - and ideally at 2 per cent. Those figures could be higher when the next round of forecasts are released next week, with recent inflation expectation surveys released by the Bank showing people are mentally prepared for higher prices.
Its most recent published forecasts had inflation at a whopping 5.3 per cent next year, and said it would not return to below 3 per cent until mid-2024.
Robertson said he needed to balance the cost of continued cuts with the benefits.
“It’s important to make sure our policies are balanced to be able to see inflation come down, that we do get our public spending down to the levels forecast in our budget. We will look at the evidence that’s in front of us.
The poll was taken between November 3 and 8, and polled 1000 respondents. The maximum sampling error is 3.1 per cent at the 95 per cent confidence interval.
