Ardern rules out regional fuel taxes beyond Auckland while she's PM

Ardern commits to restricting regional fuel taxes to Auckland while she's at the helm; Bridges happy, but dubs her decision a backdown made on the hoof

24th Oct 18, 4:48pm by Jenée Tibshraeny

Jacinda Ardern has ruled out approving regional fuel taxes beyond Auckland while she’s Prime Minister.

During Question Time on Wednesday, she said: “I can give this guarantee to this House and to consumers – there will be no other regional fuel taxes while I’m Prime Minister, which at the moment feels like it might be for a while.”

The Land Transport Management (Regional Fuel Tax) Amendment Act 2018 restricts the introduction of a regional fuel tax to Auckland until at least January 1, 2021.

However, while being questioned on fuel prices by National Leader Simon Bridges, Ardern said that even after 2021, she would prevent regional fuel taxes from being introduced to other parts of the country if she was still Prime Minister.

Bridges responded, saying: “Did she just make that undertaking on the hoof because she knows how much this is hurting kiwis all over the country?”

Ardern snapped back: “Mr Speaker, I made that statement because that member is circulating false information.”

Bridges on Wednesday morning told the AM Show that a source had told him Wellington City Council was in “secret talks” with the Government over introducing a regional fuel tax.

Wellington Mayor Justin Lester rejected this claim shortly after, while Transport Minister Phil Twyford said the Government had “explicitly ruled out a regional fuel tax in Wellington”.

National's Transport Spokesperson Paul Goldsmith later in Question Time asked when the Transport Minister knew about the policy change.

Associate Transport Minister Shane Jones conceded: "When the Prime Minister stood up.”

Local councils: Fuel taxes aren't ideal. The AA: They aren't necessary beyond Auckland

Bridges in a media release said that while New Zealanders would be relieved, the 14 other councils that had started discussions with the Government about introducing a tax would be “surprised to hear about the Prime Minister’s backdown”.

Asked by interest.co.nz what their responses were, Local Government New Zealand President, Dave Cull, said: "We think there needs to be better alignment between local council revenue and growth, to encourage councils to embrace growth and find ways of funding their own infrastructure without the need for fuel taxes.

"For example, if the Government gave councils a share of GST generated in their area they would have a clear incentive to provide infrastructure in a timely fashion because any uptick in economic activity would boost their revenues.”

The Ministry of Transport, in a Regulatory Impact Statement (RIS) statement it prepared before the Land Transport Management (Regional Fuel Tax) Amendment Act was enacted in June, said: "Outside Auckland, Wellington and Hamilton City Councils have expressed an interest in alternative funding arrangements to bring forward transport projects in their regions."

It referenced Hamilton Mayor Andrew King saying: “We will be working hard to collaborate with the new Government on additional funding opportunities such as a regional fuel tax, infrastructure bonds and loan structures to reduce any rates increase for Hamilton.”

The RIS also acknowledged funding gaps in other regions, saying: "Recently train improvements in the Wellington region, including more frequent and reliable services for the Hutt Valley, were put on hold because the Wellington Regional Council had not found the $30 million needed to pay for them."

However it said: "The AA believe other parts of the country do not face infrastructure pressures as critical as those of Auckland, and are not set to create the same burden for taxpayers on a national scale."

A 10-year regional fuel tax of 11.5 cents per litre (including GST) was introduced in Auckland on July 1.

Under the Land Transport Management (Regional Fuel Tax) Amendment Act, revenue from a regional fuel tax can be used to fund transport projects proposed by a regional council and approved by joint Ministers (Finance and Transport) after public consultation.

You can see the list of projects that revenue from Auckland's regional fuel tax will be used for here.

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27 Comments

by JimboJones | 24th Oct 18, 4:57pm 1540353442

This seems a bit stupid. The fuel tax would effectively be enacted by an elected council. If it was unpopular (the improved roads were not worth the tax), that council would be a goner at the next election. Why not call it the council fuel tax and allow the councils to use it as they wish/dare?

by RickStrauss | 24th Oct 18, 5:07pm 1540354040

Regional fuel taxes are just a way for landowners to foist their rates burden required for development onto other people instead, so shouldn't really be encouraged. Betterment is received from that development, so contribution to it is fair.

by Foxglove. | 24th Oct 18, 6:51pm 1540360289

Blimey who could ever trust our/your council. Have money will squander. It’s not the elected council, they can’t control the staff hierarchy. Doesn’t matter who comes and goes each election. Don’t you know councils are no longer councils. They are corporates. Corporates are run by executives don’t you know. No one tells executives what to do. Not the mayor, not the councillors and certainly not the shareholders ie rate payers. Viva Brown Cardigan Brigade.

by Masher | 24th Oct 18, 5:42pm 1540356158

Await announcement of Regional Fuel Levy......

by Jenée Tibshraeny | 24th Oct 18, 6:29pm 1540358989

Folks, I've updated the story with a response from Local Government NZ and a few lines from a Regulatory Impact Statement to provide a sense of how the PM's call is being received by councils around the country.

by The_4th_estate | 24th Oct 18, 6:43pm 1540359826

Just add it to developers impact contribution, thats what causes congestion.

by Advisor | 24th Oct 18, 7:20pm 1540362006

A mass transit rail system sounds unnecessary for Wellington IMO. Some work should go into increasing movement capacity across tunnels though.
Having lived in Hamilton previously, it is safe for me to say that the council is simply being cocky, trying to get more money to play with for no evident reason.

by Foxglove. | 24th Oct 18, 7:33pm 1540362800

Without wishing to sound unremittingly cynical about this, but if people get to the point of not being able to afford to fill up the family car, they are going to blame the government as they always have. I mean they blamed poor old Norman Kirk and his government for an oil crisis created by the inner turmoils of the Saudi Arabian monarchy. So if councils upping the price of petrol becomes the last straw on the camel’s back? Who gets the blame? Clever government doesn’t want to risk that but first it takes what it can squeeze itself.

by Brutus Iscariot | 24th Oct 18, 7:41pm 1540363261

Local bodies should be on a level playing field. Seems unjust to allow another revenue gathering tool for Auckland, but nowhere else.

Also runs completely counter to what the government is trying to achieve on the infrastructure front.

by solardb | 24th Oct 18, 8:14pm 1540365273

Fake news hits NZ. I think I prefer Trump to Bridges.

by PropertyPrices2Fall | 24th Oct 18, 8:50pm 1540367404

Geez, you have a low standard

by bilbo | 25th Oct 18, 10:27am 1540416461

The council needs to drain the swamp. Here in Christchurch they spent big $$$ on a half year project landscaping a new 10 acre lawn in Hagley park. End result it still floods over the footpath whenever there is rain.

NZ is a wonderful place if you own an earthworks contracting company.

by PocketAces | 24th Oct 18, 9:02pm 1540368163

Bridges' advisor needs to give him a couple of fish to slap down on his desk rather than all the dead cats.

by Foxglove. | 24th Oct 18, 9:12pm 1540368726

That rings a bell. Monty Python Fish Slapping Dance. Thanks for that PA. Quite fitting!

by PocketAces | 25th Oct 18, 7:18am 1540405095

Had David Shearer in mind

by mlpc | 25th Oct 18, 8:50am 1540410652

Bridges is right about Ardern making decisions on the hoof.
She has form for that sort of thing.

by waymad | 25th Oct 18, 9:22am 1540412566

The thing that struck me was that she got neatly backed into a corner, retaliated with a Captain's Call, and now is stuck with an absolute statement about No New Regional Fuel Taxes. At least until 2021 - after the election...I suspect that Labour is discovering the dual whammy of regressive taxes, and their impact on the working poor, the hard way.....

by RickStrauss | 25th Oct 18, 12:01pm 1540422112

It's likely the call that needed to be made, however. Councils already have a mechanism to raise money: rates.

by Boatman | 25th Oct 18, 8:58am 1540411103

The Government has learnt a lesson the hard way, that taking more in taxes is almost always a zero sum game.

Fiddle with taxes and the finely balanced economy gets a shock

We mostly all have a fixed income , and if you take more of it in tax , then something will have to be given up to pay that tax .

So we spend less on other stuff , and as a consequence are the Government collects less in GST, companies who provide non-essential goods and services make less profit , pay less income tax and could even retrench staff .

Some people are spending less on food , which is just awful , but most will cut back on discretionary spending on things like nights out , movies , dinners, maybe Sky , or those very expensive rugby tickets .

Slapping us with a new tax will always have consequences way beyond what was intended

by delboy | 25th Oct 18, 10:47am 1540417622

They haven't learnt a lesson. They know the consequences of over taxing but choose to be willfully ignorant.

The other risk over increasing tax is people move overseas. Prior to the internet people tended to grin and bear it but nowadays its much easier to pick up a job, in Australia for example, and move away if the cost of living and taxes become too much.

by RickStrauss | 25th Oct 18, 12:03pm 1540422238

However, let's be a bit realistic about costs. The increase in housing costs over the last decade makes a much bigger difference there. Couple that with an increase in GST last time around - affecting everything people can spend on - and we've got a more persuasive case to leave than only the petrol taxes this government and the last government increased for transport projects.

by delboy | 25th Oct 18, 12:17pm 1540423025

National allowed and in fact enabled rampant house prices and yes a GST of 15% was a shocker. However they’ve gone only to be replaced by a new bunch of self serving, Ponsonby living numpties

by Nzdan | 25th Oct 18, 11:30am 1540420248

People will also drive less, consume less fuel, which could result in a lesser tax take over time on fuel.

Fuel companies, while some might loath their profitability, could end up selling less liters of fuel over a month but still have rent, power, transport, wages, shareholders etc to pay so they'll need to increase the margin per unit to cover their costs.

by christlucas | 25th Oct 18, 9:49am 1540414198

I was thinking since Auckland is the only region to have a fuel tax now should Auckland keep its own taxes for its own city and its own transport etc and stop paying for all the govt projects and welfare payments around the rest of the country. Its all seems a bit one sided

by ham n eggs | 25th Oct 18, 10:31am 1540416661

We could go further and let Auckland take all it actually produces and see how it gets on as a standalone... but its very hard to survive on waste.

Cities are just consumption pits ...designed to gobble up resources and produce "wealth"... ie debt.
Some economists call it growth.

So we add houses (and wealth!) & cover dirt and the free energy capture we had ... all in the knowledge that the new house occupier has a new job to service this wealth courtesy of imported energy from somewhere....

And the new job ... building more houses and roads and trucking more stuff in.

by kiwi_overseas | 25th Oct 18, 4:39pm 1540438782

We'd be far better off with congestion tolls in Auckland.

They would delay/delete the need for very expensive future roading infrastructure & the level of excise tax could be dropped.

The regional fuel tax will push some mode shift towards PT but not as effectively as congestion tolls would for the critical commuter travel peaks.

by Morley | 25th Oct 18, 7:06pm 1540447596

its not an issue as all cars made now are electric. rego up all round. fuel tax down to smooth transtion.