Tuesday, June 18, 2024

Fuel excise cuts go the extra mile

Reductions to New Zealand’s fuel excise duty and road user charges along with half-price public transport costs will be extended until the end of January 2023 to ease cost of living pressures, the Government has announced.

Finance Minister, Grant Robertson said the cut to fuel excise reduces the cost of filling up a 40 litre tank of petrol by more than $11, and for a 60 litre tank, more than $17 and half price public transport sees an average person who pays two $5 fares a day save $25 a week.

“We know that inflation is rising across the world, and cost of living pressures are making it tough for New Zealand right now,” said Minister Robertson.

“High fuel prices, particularly driven by the impact of the Russian invasion of Ukraine, are a global problem affecting households and businesses in New Zealand.

“That is why we moved in March to cut fuel excise tax by 25 cents a litre and road user charges by equivalent levels, along with halving public transport fares.

“At the time of the Budget we extended those reductions, and are now extending them again by more than five months until January 31 because we want Kiwis to have some certainty over the coming months in the face of volatile prices at the pump.”

He said Treasury estimates the combined impacts of the extension will reduce headline inflation by 0.5% points in the June 2022 quarter. Even though many commentators are forecasting that inflation will peak in the June quarter, it is likely to stay for some time at levels higher than we have seen in recent years, the Minister said.

Extending the fuel excise and RUC reductions until the end of January is estimated to cost $589 million. The cost to extend half price public transport is an estimated $63.1 million.

“In the end of financial year wash up we have identified funding that we can re-prioritise to meet these costs and top up the National Land Transport Fund, in particular from lower than forecast write-offs from the Small Business Cashflow Loan Scheme, and money remaining in the COVID Support Payment allocation,” Mr Robertson said.

“There’s no easy fix for the cost of living, but we’re taking a range of actions to ease the pressure on families. In the case of today’s announcement we know that the rising price of fuel has a direct effect on inflation, and making these changes is a targeted approach to a root cause of the cost of living pressure being faced by Kiwi households.”

 “We also have the first cost of living payment going out in two weeks’ time. This payment will support an estimated 2.1 million people aged 18 and over for a three month period,” said Mr Robertson. 

“The global fuel price crisis is not leaving many untouched so we’re pleased we’re doing what we can to ease pressure on motorists,” said Energy and Resources Minister, Megan Woods.

Transport Minister, Michael Wood said since half price fares were introduced on April 1, public transport use has increased in the three largest centres – Auckland, Wellington and Christchurch.

“We know this makes a real difference for people feeling cost of living pressures, particularly lower income households. Because half price public transport will now be available for all New Zealanders until the end of January, the Community Connect scheme will now start on February 1 next year,” said Minister Wood.

“This will also give more time for local authorities to put in place the systems required to efficiently administer the Community Connect scheme that will give those who have Community Service Cards half-price public transport permanently.

“Extending the reductions to fuel excise duty and road user charges will also help to reduce the fuel burden on the road transport sector, and in doing so keeping the cost of food and essential goods lower,” he said.

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