Emily Henderson: Govt helping Kiwi families deal with global energy crisis

Emily Henderson says the sharp fuel price hike isn't because refining is stopping at Marsden Point. Photo / Michael Cunningham

OPINION

On Monday, our government unveiled a package of measures to help Kiwi families deal with the global energy crisis triggered by the war in Ukraine.

To provide some immediate relief, for the next three months we're cutting 25c a litre off the fuel excise tax, which goes directly to road maintenance and construction.

We're also subsidising councils to make public transport 50 per cent cheaper. This will both help families and continue to encourage a greener transport network because the real solution here is to reduce fossil fuel dependence.

Petrol price hikes are an international problem: Russia is a key oil producer, and the sanctions to curb its aggression – that Kiwis overwhelmingly support - combined with already-unsteady fuel production during the pandemic, are driving a sharp price hike worldwide.

Contrary to some local opinion, it isn't due to Marsden stopping refining (which in fact it hasn't yet done). The company's decision is a blow to the industry in Whangārei, but has no real impact on our fuel prices or security because we've always imported the raw ingredients. There's going to be more uncertainty until the Ukraine war resolves, so we're keeping the situation under review.

We are also continuing our pre-existing plan to boost household incomes. As per last year's Budget, from April 1 almost 60 per cent of families will get an increase to Working for Families averaging $20, superannuation to increase $52 a fortnight for a single person and $80 for a couple, and main benefits will increase up to a further $35 a week.

There is a fundamental political proposition here: taxes pay for services; cuts mean cuts to services. New Zealand has pretty low-to-average taxation, ranking 24th out of the 37 OECD countries, lower than countries like the UK or most of Europe. During the global financial crisis, the previous government chose retrenchment and austerity; we chose to spend to maintain our economy with wage subsidies and support, bargaining that more businesses would survive and continue employing Kiwis. It's difficult but it's working, with unemployment at record lows. Right now, our prudent fiscal management means we can absorb a temporary cut to the fuel excise duty, but it's the fund that pays for road maintenance.

As Northlanders we all still suffer from the previous government's freeze on maintenance to funnel money into Waikato Superhighways. The tax cuts the Opposition is now proposing would also benefit one sector of society over another: income tax cuts pay those on higher wages far more than Kiwis on lower incomes, who receive very little. Certainly not the income support we're providing and which they vehemently opposed every step of the way.

We can afford the cost of both short-term relief measures and longer-term income support because the government accounts are in remarkably good shape, thanks to a strong health response that has prevented Covid from derailing our economy. While our debt-to-GDP ratio has increased, it is still below the forecast seven months ago and well below that of countries we usually compare ourselves to: We're under 50 per cent of GDP, the UK's about 85 per cent; the US over 100 per cent and even Germany has nearly 60 per cent. Accordingly, our international credit rating remains high with a positive outlook. There's no silver bullet and we expect continued volatility, but we're taking a range of prudent actions that together make things easier for Kiwi families.