The Government is ditching the $568 million clean car upgrade, narrowing its plan to nationally reduce speed limits and staging the rollout of Auckland light rail all in the name of supporting Kiwis through the cost of living crisis.
The Government is also spending $2 billion on a welfare package PM Chris Hipkins calls “bread and butter support” to take the “bite” out of the rising cost of living. About 1.4 million people will benefit, including pensioners, students, children and parents, and those on main benefits.
Having already stopped the TVNZ/RNZ merger and the biofuels mandate, Hipkins said the total sum of the reprioritisation was worth about $1 billion - all to be reallocated towards “bread and butter” issues.
He also didn’t rule out further changes to the Government’s work programme.
“My expectation is that Ministers will continue to prioritise their own work programmes, including by re-scoping plans and amending policy where necessary,” Hipkins said.
Today’s changes included:
- Stopping Clean car upgrade scheme, worth $568m, which allowed people to scrap old cars in return for a grant for a more environmentally friendly vehicle or pay for public transport.
- Refocusing our goal of increasing and improving public transport as an alternative to driving to the five main centres of Auckland, Hamilton, Tauranga, Wellington and Christchurch.
- Staging the rollout of light rail in Auckland with the first stage expected to be confirmed by the middle of this year.
- Narrowing the speed reduction programme to focus on the most dangerous one per cent of state highways, where there are the highest numbers of deaths and injuries and where local communities support change.
- Stopping the social leasing car scheme, intended to provide leasing arrangements to low-income families for clean cars.
- Deferring advice on the second part of legislation looking at alcohol reform that relate to pricing, sponsorship and advertising to April next year as opposed to March this year.
- Not introducing legislation to lower the voting age to 16 for general elections, instead prioritising lowering the voting age in local body elections.
- Deferring work on the container return scheme that would see small refunds for returning containers.
- Deferring public consultation on a new test to determine who is a contractor and who is an employee.
On Auckland’s light rail, Hipkins said work on the project would continue alongside other “city-shaping investments” like the second Waitematā Harbour Crossing, more rapid busways and better connections to growth areas like the northwest.
He stressed other large-scale transport projects occurred in stages.
“The Waikato Expressway started in 1993, with the Bombay Hills to Mercer construction, and was only finished last year.
“Auckland Light Rail is no different. Staging the rollout will align it with other critical transport investments, particularly the second Waitematā Harbour Crossing.”
The $2 billion welfare package announced today includes an extra $311m to be spent over the next four years. This allows main benefits to be increased in line with inflation - 7.22 per cent - rather than the average wage rise as previously planned, which was costed at about $1.7 billion.
This increase in spending meant a family with children on a benefit would receive an extra $40.86 a week and a sole parent an extra $31.83 a week.
Hipkins said since Labour had been in Government families on benefits were $190 a week better off and $222 a week better off including the Winter Energy Payment available during the coldest six months of the year.
Increases to superannuation will mean couples receive an increase of more than $100 a fortnight, and individuals an extra nearly $70. Student support rates will increase in line with inflation, with single students under 24 without children getting an extra $20.21 per week.
In the last term of Government, Labour indexed main benefits to the increases in the average wage as this had traditionally risen faster than inflation.
Hipkins said that the situation had now reversed, with inflation higher than average wage rise of 6.24 per cent.
The PM said Cabinet met to discuss the latest reprioritisation efforts, with bread and butter issues at the centre.
Hipkins said it would help with putting downward pressure on domestic inflation.
He said some of the things being cut were initiatives that the Government believed in, but he recognised Kiwis were doing it tough.
Trials of the clean car upgrade had been difficult, Hipkins said, and he acknowledged he wasn’t clear whether it was the best way to get people into less emissions vehicles.
In major centres, it was the intention to keep investing in public transport and reducing emissions.
On speed limit changes, Hipkins said they would only reduce in the areas of high numbers of death and injuries. There would still be targeted reductions around schools and marae.
Part of the reason for the social leasing car scheme was because several of the communities where it was to be trialled have been affected by the cyclone. That would save about $19m, Hipkins said.
“There isn’t anything new in taking a staged approach,” Hipkins said of the delayed rollout of Auckland light rail.
More details would be released in regard to light rail this month. With billions to be spent on this it would occur over a long period of time, he said, and a business case would be developed on the “best way to stage it”.
Staging the light rail rollout would align it with other transport projects, including the second Waitematā crossing.
The Government was also deferring advice on the second part of legislation looking at alcohol reform that related to pricing, sponsorship and advertising. This will now be pushed back to April 2024, rather than come to Ministers in March this year.
Justice Minister Kiri Allan has also contributed to the reprioritisation through delaying reform of alcohol advertising in sports. Part of the reason for that was Hipkins didn’t want to see sports costs increase for families if advertising dropped.
While lowering the voting age for the general election would not be pursued, Hipkins said legislation to lower the voting age in local body elections would be introduced with the hope it’s introduced in the next term.
Hipkins said he supported lowering the voting age but there was not a Parliamentary majority to support it. He said he would not introduce a bill “doomed to fail”, which was why they would focus on lowering the age at local elections.
The PM will be aiming to be in Gisborne on Thursday to visit cyclone-impacted areas.
Hipkins said the climate policies they were cutting today would have made a small contribution to overall emissions.
The targets had not changed, he said. There were better, more cost-effective ways to drive down emissions.
Hipkins said he had met with the Green Party about this today and there were “differences in opinion”.
He said the emissions reduction budgets had not changed. This sent the message the Government was focused on reducing emissions in the most efficient way that did not impact the cost of living “unnecessarily”.
Hipkins said emissions would have been reduced by about 7000 tonnes in the policies cut today and there were other ways to make up for that.
He spoke about the state sector decarbonisation process and electric vehicles as being more effective processes.
On the second Waitematā crossing, Hipkins said he acknowledged it was a priority for people in Auckland.
Hipkins said the two car schemes had a high level of cost for a small level of reductions, and the reprioritisation was to focus on the most immediate needs of New Zealanders.
Hipkins said the cyclone would have an impact on the Budget.
On climate policies, Hipkins said they were not necessarily poorly designed but rather they were narrowing down what was most effective.
On speed limits, Hipkins said the focus would be the top one per cent. But those reductions were only one aspect of improving road safety and the Government had increased spending on a range of other measures.
In regard to Silicon Valley banks collapsing, Hipkins said New Zealand banks did not appear to have any risk.
On the impending teachers’ strike, Hipkins said he encouraged them to “get back around the table”. Pay increases under this Government were double what they were under the previous Government, he said.
Things like class size were not actually dealt with through collective bargaining though, Hipkins said.
Regarding March 15, Hipkins said there were a variety of views about how it should be acknowledged and the Government was still working through exactly how that would occur.
The community had indicated they did not want a large acknowledgment of March 15 this year, Hipkins said when pressed about why plans were so late.
Hipkins said he retained a “very good” working relationship with the Green Party co-leaders and was “absolutely confident” they could continue to work together until the election - and after if they were in the position to do so.
Hipkins, interviewed yesterday on TVNZ’s Q+A show, estimated the Government would be responsible for “somewhere between $4-8 billion dollars” just to address the cyclone damage to infrastructure.
“Then, of course, you’ve got housing and you’ve got business on top of that,” Hipkins said.
He confirmed it would be necessary to boost this year’s budget to help cover the cost of the cyclone recovery
It followed comments by Finance Minister Grant Robertson in February, who suggested he might be forced to increase new spending for the Budget to fund the cyclone rebuild over a previously-signalled allowance, alongside reprioritising existing spending.
Hipkins said about $1 billion in savings had been identified so far and Cabinet would be considering another reprioritisation paper over the next week.
“That’s money that will get fed back into the Budget process so that it can be allocated to other more pressing priorities, including the recovery effort that we’ve now got ahead of us, and cost of living-related issues.”
Dubbed the policy bonfire, Hipkins committed to reprioritising what he described as the Government’s bloated work programme to turn attention to “bread and butter” issues that contributed to a higher cost of living.
Last week, the Government walked back aspects of its land transport plan, after the Herald revealed Transport Minister Michael Wood and transport officials were putting together a plan that would place emissions reduction as a top priority of the transport plan, known as a Government Policy Statement on land transport or GPS.
The plan included changing the way road maintenance funding was used, putting it towards cycleways and bus lanes as well as just fixing roads, but Wood later promised an “emergency-style” plan that responded to the maintenance needs of Cyclone Gabrielle.
Waka Kotahi’s full 2024-27 State Highway Speed Management Plan, which had been planned for release for public consultation in June, had been expected to contain far more extensive changes, including speed limit changes and safety improvements affecting around 20-30 per cent of state highways in the next five years.
By 2030, the agency had hoped to improve the safety of 40 per cent of the country’s highways through lower speed limits or road safety improvements.
Anticipating the reprioritisation, Act Party leader David Seymour questioned the size of Hipkins’ policy bonfire.
“Chris Hipkins is trying to burn a twig in a damp forest,” he said.
“Some of these policies – like the hate speech law, which has been given to the Law Commission – have simply been put on the backburner and could make a comeback.”
PM Christopher Luxon will meet Xi Jinping in Beijing before attending the Nato summit.