March 14 (NZ Herald) – Kiwi motorists will get some relief from soaring petrol prices, with the Government slashing fuel excise duties and road user charges by 25c a litre each from midnight.
But one major fuel company has jumped the gun, announcing it will impose the price reduction immediately.
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Mobil said it would not wait until midnight, instead reducing prices across all petrol grades by the same amount straight away.
Mobil lead country manager Andrew McNaught said the company wanted to give “some immediate relief” to motorists as they drove home tonight.
“The cost of living has been having a significant impact on many households, and we want to do our part to help reduce those impacts, which is why we are dropping our prices immediately,” he said.
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Prime Minister Jacinda Ardern described the current situation as a “global energy crisis” after Russia’s invasion of Ukraine.
Cabinet had decided today to reduce fuel excise duties and road user charges by 25c a litre each, for the next three months. The change takes effect from 11.59pm tonight.
All public transport fares will also be halved from April 1 for three months.
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“We are in a wicked perfect storm,” Ardern told reporters at her post-Cabinet press conference.
“We expect continued volatility, and this affects everything.”
However the Government says it is “too complicated” to remove GST from fuel prices.
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Finance Minister Grant Robertson said tinkering with GST would be increasingly complicated.
“It’s a massive administrative job to play with GST.”
Ardern said the changes announced today were quickly achievable.
This year’s Budget in May would address longer-term issues around energy independence and a move away from fossil fuels.
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Robertson said Cabinet wanted to support people through the global energy shock.
Fuel price changes ‘within hours’
The reduction in fuel excise duties would take effect from 11.59pm tonight.
“We cannot influence the global oil price,” he added, but local fuel excises could be amended.
“It means that we can take this action within hours,” Robertson said.
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“For most taxes, it ordinarily took months to affect any change.”
The Russian invasion added to existing global inflationary pressures, Robertson said.
“On road user charges, it is a more complex picture.”
Reduced public transport fares should help cushion the blow some families faced from surging living costs, he said.
A vast array of different road user charges complicated attempts to make changes in that area.
Fuel excises went directly into a transport fund which was “always well over-subscribed” due to decades of underinvestment in roads and related infrastructure.
Robertson said today’s fuel excise cuts and transport subsidies were affordable.
The Treasury estimated the reduced fuel excises would cost about $350 million.
Money would be reprioritised from a Covid-19 fund to make up the shortfall.
The wind-down of managed isolation facilities had freed up some public money.
Energy and Resources Minister Megan Woods said she spoke with fuel company chief executives today, and most were willing to take steps to reduce prices for consumers from tonight.
Fuel industry profits would be monitored, and data made publicly available.
“There are options to pursue more data disclosure,” she added.
Woods said she was working with other energy ministers worldwide to monitor the energy crisis and take possible remedial action.
Robertson said he wouldn’t want to presume what a normal energy price was, but the latest steps from Cabinet should help stabilise prices.
“There is no issue with physical supply. It’s all about price in New Zealand,” Woods added.
Auckland regional fuel tax remains, Mayor’s reaction
Auckland Mayor Phil Goff said he recognised the pressure rapidly rising fuel prices had put on the budget of many Aucklanders, but has no plans to reduce the 11.5c a litre regional fuel tax.
“Suspending the regional fuel tax in current circumstances would worsen the crisis Auckland Transport faces with the loss of hundreds of millions of dollars in public transport fares because of Covid, while construction costs for new infrastructure and operating costs are rising rapidly.
“Any reduction in revenue in these circumstances would result in suspension of projects like the Eastern Busway and would not only delay their delivery, but also result in ultimately much higher costs,” he said.
Goff said the loss of revenue would mean less ability to borrow within debt to revenue constraints which means that investment in vital infrastructure would be cut by many times the reduction in revenue from the regional fuel tax.
That is because the council receives subsidies from the NZ Transport Agency and other sources to top up projects funded through the regional fuel tax.
Goff welcomed the short-term relief from fuel prices and the decision to provide subsidies to halve public transport fares for three months.
He said it would help people avoid higher fuel costs, look at public transport as an alternative way to travel with cheaper fares, and help a faster return to public transport after the sharp fall in patronage caused by the pandemic.
It would also offset the funding problems this has in turn caused for Auckland Transport and Auckland Council.
PM: No magic solution on global fuel prices
Ardern said an “economic crisis” was underway and it was part of her job to get New Zealand through that.
The Government did not expect the war, but it was doing what it could to respond to the economic impacts of Russia’s invasion.
Ardern said no magic solution existed, but just as the Government faced the Covid-19 challenge, it would now tackle the energy crisis.
She said new measures would be activated from April 1 to lift the income of more than 300,00 families by $20 a week.
On May 1, more than 1 million people would receive the winter energy payment.
Ardern said the main focus was how to give people more energy security over the long-term.
Making public transport more affordable was a key component of this, the Prime Minister said.
The ministers said almost 60 per cent of families would get an increase to Working for Families of on average $20 a week.
Superannuation would increase $52 per fortnight for a single person and $80 for a couple, and benefits would increase up to a further $35 a week.
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