French fuel tax protest chaos has echoes here

During the 2014 campaign, NZ First leader Winston Peters took to delivering a wee budgeting homily at every event he spoke at. These included advice to turn the hot water heater off except for two hours every morning and night, how to fix a toaster, and — alarmingly — to deal to lice by shaving your head.

He may need to come up with a new set of such homilies if New Zealanders have been paying any attention to what is happening in France, where mass protests have led to upcoming fuel tax increases being put on hold.

The French are not backwards about expressing themselves when disgruntled.

The past few weeks have seen protesters dubbed the Gilets Jaunes (Yellow Vests, after the high-vis vests they wear) take to the streets.

They set cars on fire, smashed windows, blockaded petrol depots and took on the police.

The protest was sparked by French President Emmanuel Macron’s plan to hike petrol and diesel taxes on top of already high prices. The original protesters were those who drove long distances, such as commercial drivers and even ambulance drivers.

It soon grew into a more amorphous bunch which Father Ted would call the “Down with this sort of thing” brigade, protesting against the wider cost of living, the concept of government in general and Macron in particular and concerns his reforms did not deliver to the middle class.

There are some strong parallels in New Zealand which has similar inflation levels to France and where fuel taxes have also been controversial.

We pay slightly less overall for petrol than France and for every litre, about $1 is tax — including 70 cents in various fuel taxes (80 cents in Auckland) plus GST.

In France, about 64 per cent of the cost of petrol goes in taxes.

Macron has just put on hold a further increase of about 5 cents (NZ) a litre for petrol and 11 cents for diesel — the most used fuel in France.

New Zealanders have already stomached the 11.5c regional tax in Auckland and a nationwide 4 cents a litre hike. We are now waiting for seconds — further 4 cent increases are due in 2019 and 2020.

The Government started looking worried when petrol prices went up to record highs of $2.40 a litre a couple of months ago — a combination of rising international prices and the increased Government taxes. It has since dropped to about $2.06.

The Government’s saving grace is that New Zealanders are more prone to mumbling into their Milo than hurling flaming torches on the streets. But some save their vengeance for the ballot box.

Hence the Government has been at pains to make voodoo dolls of the petrol companies, pointing to rises in profit margins of those companies over the last eight years as unjustified.

Its response has not been to try to cut the Government’s own equivalent of a profit margin by reversing tax increases or promising to put future increases on hold.

Instead, it has sicced the watchdog Commerce Commission on to the petrol companies in a bid to force them to cut their profit margins or let the Government do it for them. Peters has suggested if they do not have a “come to Jesus” moment, they will suffer from legislation.

This Commerce Commission probe will not report back for another year, but the Government is hoping that will at least make it look as if it is Doing Something.

The Government now has a year to pray the companies do cut profit margins, or that international prices fall before it has to add its next tranche of taxes.

There are wider lessons in Macron’s plight. Macron and Ardern are not exactly political soulmates, but did get into power on some similar campaign platforms. The most obvious was action on climate change.

That is all nice and dandy when that is just words. Both Canada’s Justin Trudeau and Macron have learned things are different once the cost of “action” hits the taxpayers’ pocket — the middle classes.

Ardern has set even loftier goals than Macron. The fuel taxes are just the start of paying to achieve that. Peters had better come up with some good money-saving tips or the Government could find there is a run on high-vis vests.