Cuts unlikely to run out of gas any time soon

In March the Government announced it would be slashing fuel excise and road user charges by 25 cents per litre to ease the cost-of-living crunch. Then, in July, Grant Robertson and Megan Woods announced the scheme will run until the end of January. Public transport ticket prices were also halved in the package.

It comes as the Australian Government, which also slashed fuel excise by 23 cents per litre, is letting its cuts expire tonight. The change is expected to cost Australian families an extra A$35 per week. The difference is in timing. Whereas the cut to the Australian excise was announced in the dying days of Scott Morrison’s coalition government, its reinstatement will be done by Anthony Albanese’s Labor, three long years before an election.

In New Zealand, no seasoned political observers believe that, at the start of an election year, Labour will reverse this hike, sending the cost of petrol (and its diesel roaduser charge equivalent) back up by 25 cents per litre.

The latest public poll on Monday revealed why. The 1News Kantar Public Poll had the National and ACT parties in the position to form a Government if an election were held. National, at 37%, was three points ahead of Labour on 34%. The Greens and ACT came in at 9% each while NZ First clocked 3% and Te Pāti Māori 2%.

Public polls now consistently show National being close or able to form a Government with ACT; while Jacinda Ardern still leads

Christopher Luxon in the preferred prime minister stakes: 30% to 21%.

Labour is in a red-hot political fight that will likely last until an election in about a year’s time. And, anything that will crimp its chances will likely be dropped, or in the case of the fuel excise cut, retained.

This points to a wider issue for Labour. It is battling economic mega-trends that are being felt around the world: inflation and, even in the past few days, the dropping New Zealand dollar, which while good for exporters, means that imports will cost New Zealanders more.

So the fiscal cost of the excise cut – about $1 billion up to the end of January – will most likely be worn by the Government for the foreseeable future. That means the national land transport fund – where the money from the excise goes – will have to be topped up from another pot of Government money.

National has so far basically supported the Government’s measures, but as time drags on and petrol is cheaper that support will become harder to justify. In

Australia, the Albanese Government simply made the call that the fiscal cost is unsustainable and that with fuel prices having receded from the highs earlier in the year, it was better to rip the band-aid off quickly. Meanwhile, the polls seem to have stabilised for the time being.

Labour has shored up its support, while Luxon National seems to have settled into a solid but not spectacular polling position.

ACT and the Greens will (and even NZ First) continue to be pleased.