The road transport industry is welcoming the Government’s decision to extend fuel tax relief and discounts to road user charges until January.
The move was announced on Sunday to provide additional cost of living support in an effort to fight rising inflation.
A fuel excise duty cut of 25 cents a litre and equivalent reduction in road user charges, along with half price public transport, were first announced in March. The reductions were initially planned to last for three months but were extended again in the May Budget and were set to end on August 15.
Extending the fuel excise and RUC reductions until the end of January is estimated to cost $589 million.
It’s money that usually goes directly to the National Land Transport Fund to pay for building and maintaining roads, and funding public transport, walking and cycling initiatives. The cost to extend half price public transport is an estimated $63.1 million.
Treasury estimates combined impacts of policy will reduce headline inflation by 0.5 percentage points in the June 2022 quarter.
The cut to fuel excise reduces the cost of filling up a 40 litre tank of petrol by over $11, and for a 60 litre tank, over $17 and half price public transport sees an average person who pays two $5 fares a day save $25 a week.
Finance minister Grant Robertson says the move was made to give Kiwis some certainty over the coming months in the face of volatile prices at the pump.
“We know that inflation is rising across the world, and cost of living pressures are making it tough for New Zealand right now.
“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,” Robertson says.
“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.
“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,” Robertson says.
Transport minister Michael Wood says 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.
“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,” Wood says.
Relief for road freight
Road transport body Transporting New Zealand has reacted positively to the move and has recently warned the skyrocketing costs were threating the survival of some companies.
Transporting New Zealand’s recent operator survey of some 400 businesses nationwide showed that 41% of transport operators said the RUC discount made a meaningful difference to their business costs, while over 96% of those surveyed supported Transporting New Zealand’s request to the Government to indefinitely extend the discount.
“It’s pleasing to see that Transporting New Zealand has its finger on the pulse of industry opinion and that we are listened to by Government,” its chief executive Nick Leggett says.
The 36% RUC discount was due to expire in September and Transporting NZ has recently written to the transport minister requesting its indefinite extension to the discount for fuel RUC and public transport fares.
“It would have been undermining of the road transport and other industries reliant on diesel for the Government to drop the discount now, with international oil prices staying so high,” Leggett says.
“This is good news all around and will extend relief for road transport operators who are up against it with escalating costs and nowhere to turn,” he says.
