Extended fuel subsidy: a ‘save’ or a ‘Band-aid’?
What locals say about Govt’s cost of living response
“Fuel is a disaster for us,” says Andrew Gundry, transport manager for a trucking company running a fleet of 30 vehicles in the Bay of Plenty.
“It goes before we see any value from it. Fuel goes in the tank, people go and do the jobs — it is another at least 30 days before we see any income from that.”
He is among those welcoming Sunday’s announcement extending the 25 cents per litre Government reduction to fuel excise duty — along with cheaper road user charges and half-price public transport — until January 2023.
The measures were introduced in March in response to the rising cost of living.
A Government statement said the discount would save motorists more than $11 on filling a 40-litre tank. It estimated the combined measures to address the cost of living would shave half a percentage point off headline inflation in the June 2022 quarter.
But a transport business owner says the Government should not have let inflation get so bad in the first place, and its latest moves will only be “a Band-aid”.
Other Tauranga residents said the Government had little choice but to extend the discounts, with one saying people were being forced to choose between petrol and food.
Addline Transport Ltd’s Gundry said the discount “will be a save for us, definitely”, but felt the Government was in a position where it had to extend it.
He said the cost of petrol was “horrendous” and the business could not absorb it.
Gundry anticipated the road user charge reduction would also save the company, which offers bulk tipping and general cartage services, “a little bit”.
Self Loader Logging Ltd company director Bryan Smith said the extension was a positive move but he also viewed it as “a Band-aid” to “help fix the mess” the Government created.
“It is an ambulance at the bottom of the cliff,” Smith said.
“Ideally they wouldn’t have let inflation get as out of control as it is. It is a stop-gap measure isn’t it — and they can’t let it go on forever.”
The Taupo¯-based logging haulage company operates across Rotorua, Tauranga and the wider Bay of Plenty and Smith said fuel was a “significant” cost.
In response, Minister of Transport Michael Wood said inflation and fuel prices were rising across the world, driven by the impact of the Russian invasion of Ukraine.
“This global problem has a local impact here on households and businesses in New Zealand,” Wood said.
He said the Government recognised the road transport industry’s vital role in the supply chain and that it was feeling
the impacts of high inflation.
“That is why we are backing the industry through these challenging times.
“The extension of the 36 per cent road user charge reduction will reduce industry costs, and help goods continue to get to where they are needed.”
Extending the fuel excise and road user charge reductions until the end of January was estimated to cost $589 million, while half-price public transport would cost an estimated $63.1m.
Tauranga cyclist Barry Morris doesn’t drive but thought the package was “fantastic”.
“I cycle everywhere but my heart goes out to drivers at the moment. A lot of people I know are being forced to choose between gas or food.”
James Brown thought the Government was caught between a rock and a hard place and was forced to spend the money.
“I would prefer it if they spend less, I don’t think they spend very well,” he said. “But I don’t think that they had a choice, to be honest.”
Philip Williams hoped it would encourage public transport.
“Anything to encourage bus use is a good thing.”
In Rotorua, 62-year-old Robert — who did not give his surname — said anything to help those on a lower income cope with the cost of living was a good thing.
“If they can extend any tax reductions, the longer, the better. It’s a good move from the Government.”
Tauranga Business Chamber chief executive Matt Cowley said the discount extension was a good decision, but could not last forever.
He said fuel prices were tough for businesses with big vehicle fleets, including trades, logistics, and primary sectors.
“Businesses are sharing the burden of rising fuel costs with customers as much as possible in order to maintain relationships,” Cowley said.
Discounted bus fares were necessary for those reliant on public transport, such as students and the elderly, he said.
Anecdotally, he said local workers were tackling rising fuel costs by negotiating work-from-home options or finding new jobs closer to home.
It comes as the first temporary cost of living payment of $27 weekly — for people over 18 earning less than $70,000 who do not receive the Winter Energy Payment — will go out
in two weeks’ time.
Minister of Finance Grant Robertson said there was no easy fix to the cost of living but it was taking actions to ease the pressure on families.
“We want Kiwis to have some certainty over the coming months in the face of volatile prices at the pump,” Robertson said.
UBCO chief executive Katherine Sandford said fuel cost increases had contributed to rising demand for its 2X2 electric adventure vehicles.
Sandford said the Tauranga-based start-up had growing demand locally and across its key markets, including the United States.
“For each of the last two months we have reached a record $1m in monthly revenue, and we are set to top that again this month,” Sandford said. “The combination of fuel and economic pressures, together with a general move toward more sustainable options, means people are now more action-oriented when factoring in electric options.”
Sandford said some people were thinking about getting electric adventure bikes as an alternative to a second car and many businesses were considering using alternative transport for staff.
The cost of getting around town and providing standard vehicle transport for staff was “reaching a tipping point”.