Despite repeatedly ruling out another extension as too expensive, the Government has again relented at the last minute, extending the 25c/litre fuel levy cut set up after Russia invaded Ukraine for a fourth time to the end of June.
Extending it for a fifth time from then just three months before the October 14 election now seems a sure thing, along with disbelief at any further rulings out.
Half-price public transport was also extended until the end of June, and will be permanently half-price for those with Community Service Cards, including tertiary students, from July 1.
New Prime Minister Chris Hipkins made the announcement in Auckland after visiting a relief centre in Mangere catering for people flooded out of their homes by the most expensive climate change disaster in our history. Hipkins was repeatedly challenged at a news conference to justify the extension of subsidies to create more climate emissions by burning petrol and diesel when the effects of climate change had just proved so disastrous.
“The Government has an extensive climate change programme underway. We’re absolutely focused on reducing emissions. The public transport (fare) reductions, for example, that we’ve put in place today, are a positive step in terms of getting more people into public transport,” Hipkins said.
“And we’ve got extensive work going on around the electrification of the vehicle fleet. We’ve got a lot of work happening to reduce our emissions overall as a country in the electricity generation space,” he said.
“But we also have to acknowledge that right here and right now, that increase in fuel costs is putting a significant amount of pressure on families who have no choice but to continue to fill up the car.”
Hipkins repeatedly went back to his initial comments as PM that he wanted to focus the Government on ‘bread and butter’ issues.
“I’ve said bread and butter issues like the cost of living would be my top priority. This is our first step in dealing with some of the persistent cost pressures on businesses and families,” he said.
“Reducing the cost of fuel excise and public transport is a good candidate for early action – it’s a major cost for nearly everyone, we know how to do it, and can roll it out quickly,” he said.
“It is a small and meaningful first step in an ongoing series of measures to help with some of the persistent cost pressures on businesses and families.
“The floods in Auckland and Northland are putting extra stress and financial pressure on families. Cutting fuel excise and keeping half price public transport gives some extra relief as Auckland goes through a difficult period.”
Finance Minister Grant Robertson said the extended nature of higher inflation justified the fuel tax cut extension.
“It is also a good policy for business. The cost of freight and running car fleets is a big cost for many businesses, so this extension helps relieve a bit of pressure on those doing it tough right now,” he said.
The extension will reduce headline inflation by 0.5% in the June 2022 quarter, although the Reserve Bank is supposed to ‘look through’ such one-off policy changes. Robertson estimated the extension of all measures would cost about $718 million.
“We can strike a balance between targeted ongoing support and careful management of the Government accounts. We are paying for the extension from savings identified in the most recent baseline update,” he said.
“This extension takes us to the end of the financial year. We have already indicated that the Budget will have a cost of living focus, and this extension covers the time until that comes into force.”
Transport Minister Michael Wood said diesel drivers had already pre-purchased Road User Charges to cover them for the coming month, which would provide time for fresh legislation to reintroduce the discount until June 30.
70 Comments
Ok, so what do you want them to ACTUALLY do? It's all very well to carp and moan from the sidelines. What is your policy prescription?
Note that the government has introduced the Clean Car Feebate, as well as a system to coerce vehicle importers to import more clean vehicles (lower emitting gasoline, hybrid and electric vehicles).
Do you want the government to roll out cheaper public transport? Well they've done that too. Do you want them to make public transport free for the neediest sectors of society? Well I suspect you may see that in the upcoming budget.
Do you want them to support biking infrastructure around the country? Well they've done that.
Do you want them to support public transport in regional centres?
Why does it sound like I'd be complaining if they axed it? My complaint is that they didn't.
My policy prescription is to tax fossil fuel consumption in a similar way that we tax tobacco - punitively, with a clear path to incremental, significant increases over time, to reduce it's competitiveness and attractiveness against alternatives. This would lead to a reduction in lifestyle/consumption across the board until the alternatives have the scale to be price competitive (if ever), and that's fine by me.
So you would repeal all of the other policies I outlined that this government has put in place?
Or would you just add heavy taxes on top of all of those policies they have put in place?
You do know that in order for a government to remain in power, they have to do things that are popular with the public, right?
Do you think your policy prescription would be popular with the public? I don't. Do you know what happens to unpopular governments? They are voted out of office and the opposition comes in and reverses their unpopular policies.
There's no point putting in punitive taxes for petrol as you suggest, if the opposition would simply get into office and repeal them. It ultimately achieves nothing.
Government requires consent of the governed.
Repeal the policies? No.
Heavy taxes on top? Yes, but well signalled, and incremental over time.
Simply doing 'least resistance' politics forever will drive us off a cliff, and to go back to my original post, and these decisions are all incremental. Hipkin's has shown he will take the easy/popular decision instead of the right one. Disappointing.
Yes, but well signalled, and incremental over time.
You think either of those things would stop the opposition repealing it?
Simply doing 'least resistance' politics forever will drive us off a cliff
Yes, I totally agree.
What we are both talking about is moving the overton window. Your approach won't work.
Increasing taxation is seldom a right idea if the objective is to change behaviour. For example, increased tobacco excise taxes were used for years with only margin improvement and a great deal of unintended consequences.
Raising the age of tobacco purchase one year every year - means no new addicts for generations to come. It's not a punitive measure (where those already addicted are concerned) - instead it is a preventative measure.
Same applies to petrol tax. One needs to incentivise abstinence (from using fossil fuels) - not place a punitive tax on many who have no alternative.
I'd go further than that - the government has a moral obligation to be more active; it can't tax people on the emissions of vehicles but then discount fuels as an election year sop, it can't tax our biggest city with a regional fuel tax that no one else pays but then totally fail at delivering rapid transit networks, and it can't cut excises at the same time as a climate emergency and the biggest city gets ravaged by a huge tropical rain event. There is a total moral failure on the part of the government, trying to have their cake it eat it too - the actual issues they have legislated to intervene in are secondary to the politik of the moment doing what it takes to stay in power.
All this climate change policy is just peeing into the storm
Much better if we focused on being ready for what is coming rather than focused on trying to stop it
Sure there are sensible policy plans in place - carbon pricing - but the rest is virtue signalling and waste when being prepared is more important
We should also being doing some serious research to understand exactly where the Tongan volcanic eruption fits into this weather pattern and how long it will continue to impact
Some have tried to work out the Tongan impact:
https://www.livescience.com/tonga-eruption-water-vapor-surface-warming
https://www.skynews.com.au/australia-news/how-a-tongan-volcanic-eruptio…
The ministry of education wisely considered that it would be much clearer to just say all schools should stay closed, to relieve stress on the road system.
Given the extra rain Auckland had in the last couple of days, it was a sensible decision.
Now that the forecast shows better weather in Auckland and they have had a chance to assess damage to specific schools, as well as the road network as a whole, they are allowing individual schools to make their own decisions to open - which they will need to communicate to parents themselves.
It's not a "flip flop", it's a sensible reaction to the worst natural disaster Auckland has suffered in several decades.
Yes, I would think parents would like the clarity of all schools in the city being shut until X date. They can make plans for that.
If it then turns out that the school is open sooner than that, they can either continue with the plan they already instituted and keep their child home until the original date - no one is going to mind - or they can undo that plan and send their child to school.
As for what teachers want - you do understand that teachers who teach at a school in suburb X that was largely unaffected by the floods, may live in suburb Y that was affected and therefore need to stay home to sort out their own affairs. Same goes for parents.
There simply is nothing wrong with the policy as outlined, and it's nothing about "changing plans on a whim", it's about sensible crisis management.
Also I've only party-voted Labour once in the last 3 elections and am unlikely to party vote them again. I am not a Labour party spruiker, rather I apply rational critique and consider multiple angles for any policy suggestion.
The ministry of education - who are not the Labour party - made the right call in this instance.
Most schools communicate with parents by facebook posts , or texts . its not a big deal to change opening days etc. those of us in rural areas areused to short notice because of weather events.
countdown and several malls closed early because of the flood threat. Looking back one could criticise that too, as it turned out mst could have stayed open.
Finance Minister Grant Robertson said the extended nature of higher inflation justified the fuel tax cut extension.
So increasing fuel costs that feed into the costs of everything else is a bad thing but increasing interest rates to take heat out of the economy is a good thing? Gotcha.
Transport Minister Michael Wood said diesel drivers had already pre-purchased Road User Charges to cover them for the coming month, which would provide time for fresh legislation to reintroduce the discount until June 30.
Diesel drivers were dissuaded from pre-purchasing RUCs for the coming months as we were going to be pinged with any outstanding discounted RUCs from today onwards, picked up at time of WoF.
So increasing fuel costs that feed into the costs of everything else is a bad thing but increasing interest rates to take heat out of the economy is a good thing? Gotcha.
Yep, If you have no debt increasing interest rates don't do diddly to your cashflow. Increasing fuel prices affects anybody that needs to drive to work, or for work. ie, a huge proportion of the population, including many low income people who are already being whacked hard by inflation.
"If you have no debt increasing interest rates don't do diddly to your cashflow." Unless you rent of course. Most rental properties are supported by debt.
And unless you have a business or use products produced by businesses because the majority of businesses have some amount of debt, often supported by the owner's house.
Increasing fuel prices also affect consumers of anything brought to them by a truck.
If you want to help people who need to drive to work, then you lower income tax. Same benefits without the downsides.
Instead they prefer the fuel tax cut because it has the political advantage of artificially lowering the CPI - more important than the climate, I guess.
One of the very first things Ardern did upon taking office is clear up the "meth house" hysteria that National had presided over. The Labour government had to pay out millions of dollars in compensation to state house tenants who were found to have been illegally evicted by the National government.
The Labour government also brought in access to preventative HIV drugs, and have recently increased access to these drugs even further. A policy that National were very staunchly against, despite the low cost of the measures and clear societal benefits of driving HIV infection rates to 0, for which these drugs are a keystone public health intervention.
Labour is friend to plenty of people, and that's without mentioning the 10,000+ people who are still alive due to the way Labour handled COVID in NZ.
NZ is in fact one of the only countries in the world which has had *fewer* people die than would normally be expected throughout 2020-2022. Yes, more people are alive today than would have been expected had COVID not struck this country.
Yeah, if you choose to ignore places like Sweden that followed traditional pandemic planning and didn't have a hysterical $106 billion lockdown for people for not vulnerable to a bad flu season.
"We observed a mortality that was lower than expected for the age group 0–69 in both countries through the pandemic year compared with each of the five preceding years. Hence, for the working population that comprises >85% of the two countries, the COVID-19 pandemic has not had a negative impact on all-cause mortality. ...the decrease in mortality rate in the age group 0–69 years in Sweden in the pandemic year was significantly larger than in Norway."
NZ deaths rates for this age group were in excess in this period and still now. Compared to Sweden we were tits. Given documented evidence Hipkins ignored MOH advice for young people, and actively suppressed informed consent, so no surprises there.
Mortality in Norway and Sweden during the COVID-19 pandemic
https://journals.sagepub.com/doi/full/10.1177/14034948211047137
https://mpidr.shinyapps.io/stmortality/
https://cranmer.substack.com/p/covid-and-our-kiwi-kids-part-2?r=1q83zj&…
Exactly right. But the Swedish embarassment does not fit the Covid modellers' erroneous narrative. As shown by people still quoting 10000 people not dying of Covid because of our government following the "correct" narrative. Remember that it is still a bit soon for Mr Hipkins to do a backflip on the "previous" Prime Minister's Covid strategy. It will come, but quite yet. He has to tidy up the fuel tax backflip, and the 3/5 Waters backflip, first.
Yes, if you want to simply ignore all the differences between Sweden's society and NZ's and want to pretend that what worked in that country would exactly work in this country, go ahead.
It is convenient to ignore all of the social inequality and deprivation in NZ, and just pretend we're wealthy like Sweden and therefore could magically achieve exactly the same outcomes by following exactly their behaviours.
There's always going to be some excuse given as to why Sweden's approach wasn't appropriate for us. At the beginning they were just demonized, but once it became too hard to deny that their approach was actually working, the argument had to be changed to "okay, sure, but that approach wouldn't work here".
We saw the same thing in the US, with states who implemented less restrictive measures than they were "supposed" to. Once it became clear that actually, everybody isn't going to die if we don't do these things, there was a big scramble to come up with reasons why, because it couldn't possibly be that the modeling was wrong, or that COVID wasn't anywhere near as bad as what we were being told.
So it was due to the fact that they didn't have an underground subway system like other places, or the demographics were different, or the climate was warmer, or people live in smaller households. Anything to divert attention away from the fact that their approach may have actually been the better one.
We made a mistake.
Say you were making 70k per year. You have had the 8% income rise so you are up to $75,600 PA.
You will now be paying additional $1900 per year in PAYE and ACC. You would need to buy 7600 ltrs of fuel
at additional 0.25c per ltr to equal that. Most people get by easily on a third of that much fuel a year.
The government wins from inflation. As long as they refuse to move the income thresholds.
Want to get more out of your taxes? Start a consulting/contracting firm in Wellington and be sure you build in automatic CPI/LCI adjusters on your sky-high contract rates. Next, hire migrants to work for you at lower than NZ job market rates.
Finally, wait for the market to bottom out and buy a house close to the Vic Uni campus for steady income and eventual capital gain or rental portfolio.
Trust me, everyone else is worse off under the Labour-National coalition.
What you should really be asking yourself is, is t the government that made the choices you mention, or ones' own self? People make choices every day but employing migrant orkers on the cheap and charging out exorbitant contracting rates aren;t the governments choices, they're your own if you do so. Looking forward to seeing some of the smaller parties get a bigger chunk of the vote and using this election to start the reshaping of the last 40 years of back and forth thinking that has clearly failed us along with the central banking system.
wow, spending more money that we don't have...They need to grow some b*lls and people just need to keep adjusting or be forced to adjust i.e Interest rates. I would have preferred the relief be on food as that will have more of an impact and reach everyone. I don't take Auckland transport because its crap and I work from home more than im in the office.
I can only guess that this will continue until after the election, and yet no one is talking about how all this borrowed money will be paid back.
Exactly, slight of hand. We have a concerningly growing budget trade deficit and have taken on billions in debt from 2020 for the covid relef find and more which we now need to pay back with interest. The upcoming election will be won on pragmatism and forward thinking that benefots the majority of New Zealand, not just beneficiaries or specuvestors.
The government spends by creating new NZ Dollar Currency as central bank reserves and then depositing it into the exchange settlement accounts of the commercial banks and this currency can only come from the central bank and nowhere else, not taxpayers or bondholders. Government borrowing has nothing to do with financing spending, it's an interest rate mechanism and what did QE do but repay debt.
Interesting that he uses the word "families" when he describes who is facing high fuel costs.
Its like whenever something bad happens to someone, the media always says its a "mother" or a "father". Or "the car went off the road".
I find those things just plain weird.
If/when something spectacular happens to me, I would not describe myself first and foremost a father. What is that??? You could say that I'm an Uncle, or an ex Engineer or a handyman etc. All totally irrelevant in my view with respect to the truly breathtaking dismemberment or whatever may happen to me..
I'm against reducing the cost of fossil fuels , but can see it is a fast response , when anything else would take time to implement.
but i would expect them to move to subsidising food at budget time.
My plan would be to subsidise dairies with the selling of milk , bread etc , so it bites into the duopoly, allows people to walk instead of drive to pick up , and provides lower cost food to most likely to shop at dairies etc , than drive to a supermarket for a big spend.
The announcement affirms my long held suspicion that fuel prices were often manipulated to offset inflation.
"There is a fifth dimension ,beyond that which is known to man...it lays between the pit of a mans fears and the summit of his knowledge...it is an area which we call the Twilight Zone' 'The Twilight Zone' tv series...lol
Robbo should have done more homework - He could have seen how difficult it is for third world country leaders to remove subsidies once implemented. But hey maybe he was just having a JA nuclear free moment - or he is just a lightweight finance minister (or most likely both)
In fact he could have had a look at NZ from 30 years ago and seen that subsidies for NZ sheep farmers were almost impossible to remove once implemented - and also resulted in costly and silly unintended consequence - including empowering the meatworks trade unions and producing food that no one wanted - or in some cases was unfit for consumption. Huge sums were paid by the taxpayers for no discernible gain. Some sheep meat was even processed, stored for 12 months and then dumped so that the cycle could be repeated
Yep like I said just yesterday, 9 months is a long time before the election. If JA really gave a rats she probably would have gone to within 2 months of the election, pissed everyone off even more then handed over to Chippy at the last minute, I mean it worked for her getting elected. Poor bloke now has 9 months to get stuff done that Labour couldn't get done in 5 years.
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