Fuel tax relief to run

The Government has announced the cut to the fuel excise will be extended until January 2023.

Finance Minister Grant Robertson said half-price public transport fares and the extension to the Road User Charges cut would also continue until January 31, 2023.

The initial cut was brought in to reduce cost of living pressures on households, in March 2022.

‘‘We are doing this because we want Kiwis to have some certainty for the rest of the year in the face of volatile fuel prices and ongoing cost of living pressure,’’ Robertson said. ‘‘We can afford to do this.’’

The Government produced Treasury modelling to suggest that it will reduce inflation by 0.5% in the June 2022 quarter.

The extension, which was expected given elevated global oil prices, will mean that while petrol prices largely remain in the $3 to $3.50 per litre range, they will not go another 25c higher. Without the extension, the Government estimated that a 40 litre tank of petrol would cost an extra $11.

Robertson attributed the cut to public transport costs as boosting patronage on buses and trains in major cities, from 49% of 2019 levels to 65%.

‘‘This is a targeted intervention where we can get to one of the root causes of the cost of living pressures New Zealanders are facing. Having done this, we’ve actually helped keep inflation under control . . . We know we are targeting directly here one of the drivers of inflation.’’

Extending the fuel excise tax and road user charges reductions would cost $589 million, as the Government would have to pay into the National Land Transport fund to replace reduced taxes. The fund pays for building and maintaining roads and public transport.

Robertson said the excise tax cuts could not go on forever, and the Government was working on an ‘‘exit strategy’’.

Energy Minister Megan Woods

said people were not paying as much for petrol with the Government’s excise tax cut.

‘‘One of the things that I do know from talking to the fuel companies is that people are filling up about as often as they were, but they’re putting less in each time.

‘‘This is very much about how it is that we can help those stretched household budgets.’’

There had been another spike in the margin the fuel companies were taking, she said.

Woods wrote to fuel companies last week asking them what the cause of the spike was, and reiterating the Government’s expectation that its excise cut is passed onto consumers.

‘‘Our expectations are that we would start to see in the next few days some of those decreased prices of crude flowing through to consumers at the pump.’’

National Party finance spokesperson Nicola Willis said the Government’s second extension of the cut was more ‘‘band-aid economics’’ and was cynically timed in advance of the inflation update.

‘‘The Government can’t spend or spin its way out of inflation and a troubled economy. They must do the serious work of removing bottlenecks to growth, such as tackling workforce shortages with better immigration pathways, and restore discipline to its own spending.’’

Green Party transport spokeswoman Julie Anne Genter said the Government should be giving people direct payments instead of cutting fuel taxes, and public transport should be free, permanently.

‘‘This is very much about how it is that we can help those stretched household budgets.’’ Energy Minister Megan Woods