Fuel tax cut announcement a mixed bag

The Government’s latest fuel tax cut announcement is a mixed bag for Whanganui businesses. Petrol users get to keep their 25 cents per litre discount until February 28, and then 12.5 cents per litre will be added until the end of March, it was announced yesterday.

After that, the discount will be gone completely.

As they are pre-purchased, the 36 per cent reduction to road user charges (RUC) will not be extended past January 31.

Graham Civil Contractors owner Richie Graham said there was a period recently when diesel and petrol cost exactly the same.

“There’s the diesel then there are the road user charges.

“That does affect us and it’s [fuel] one of the main costs in our whole industry.

“In saying that, we don’t have any control over it so we try and focus on the things we can control. We just get on with it.”

The reduction in RUC had been welcomed but it was offset by rising diesel prices, Graham said.

“It’s definitely a tough time but I’ve been in the industry long enough to know a few people and have a few contacts.

“As most people will know, there are a lot of damaged roads out there that aren’t in a good state. That always creates work.”

Fuel taxes and road user charges are paid into Waka Kotahi NZ Transport Agency’s land transport fund, which is used for projects such as new roads, public transport subsidies and road maintenance.

The extra extension of support is estimated to cost about $116 million.

AA fuel prices spokesman Terry Collins said the average price of diesel had increased by around 47 cents per litre from the same time last year.

The fuel tax had to go back on at some point.

“That pays for much-needed maintenance and repairs of our roads, it pays for improvements, safety barriers and median strips,” Collins said.

“It is absolutely critical that the fund is not affected.

“If the Government doesn’t take it out of that tax, they have to take it out of general taxation which isn’t sustainable either.”

Half-price fares for public transport will be extended until the end of March 2023.

They will be permanently halfprice for people with Community Service Cards.

Anthonie Tonnon, Whanganui District Council’s representative on Horizons Regional Council’s passenger

We try and focus on the things we can control. We just get on with it.

Richie Graham Graham Civil Contractors owner

transport committee, said while the discounts had been good, they weren’t the be-all and end-all.

An adult bus fare in Whanganui is currently $1.20 — down from $2.50.

“Much more important in my mind is the level of service and funding for greater public transport services that are really usable, in Whanganui in particular,” Tonnon said.

“In saying that, at the Durie Hill elevator the half-price fares have made a difference to a lot of people and are really popular.”

Tonnon’s company Whanganui Connection has operated the elevator since June 2021.

Ian Jackson Transport owner Ian

Jackson said he didn’t think things were “rosy-rosy” in his industry at the moment.

“Look at the price of diesel now compared to what it was,” he said.

“Every little bit helps, doesn’t it? It [the RUC reduction] made quite a difference.

“The two-edged sword then is that if [the Government] don’t get the money in, they can’t spend money on the roads.”

The cuts on petrol came into effect in March, followed by the equivalent reduction to RUC and the slashing of public transport fares.

Initially set to end after three months, the policies have now been extended three times.

The AA’s call had been to increase the tax incrementally, Collins said.

“If it was all put on at once we would have queues out the door and service stations would run dry.

“With the 12.5 cents, the Government has avoided that situation from happening.”

Collins said while there would be relatively low-cost petrol over the holiday period, there were no guarantees on what prices would be like when the fuel tax was put back on at the end of February and March.

Whanganui business The Flower Room runs deliveries every day from its central city shop.

Owner Nic McMullen said continuing the tax cut on fuel would help operations, especially as overheads were currently as high as ever.

“You can’t keep raising your delivery prices as petrol goes up, so it does impact us a lot,” McMullen said.

“The price of everything has risen. Even the freight we pay has because those companies have to pay more for petrol as well.”

Tonnon said the cost to the Government of half-price fares was far less than the fuel tax cut.

“We think it’s a no-brainer that if they do keep the petrol [cut] they should also keep the fares.”

The cost cut had increased the use of public transport by a small amount in Whanganui, he said.

“We simply don’t have enough service yet that you could replace your car with a bus. Until then, making it half-price or even free isn’t going to solve it.

“The good news on that front is we do have a new service coming in the new year, and I think it will be good enough that it’ll be a great deal even if you are paying $2.”

From February, buses will run every 20 minutes in both directions between Aramoho and Castlecliff Beach, passing through Gonville, past Whanganui Hospital and the central city.