Prime Minister Chris Hipkins has extended the Government’s fuel tax cuts and half-price public transport offerings until at least June 30 – reversing an earlier decision to end them at the end of March.
Hipkins made the announcement while in Auckland, visiting flood-affected areas and meeting emergency response staff. At the same announcement, the Finance Minister said insurance companies have told him the floods would be New Zealand’s biggest insurance event not related to earthquakes.
It is the first cost of living announcement Hipkins has made since become Prime Minister, promising to overhaul Labour’s programme and focus more squarely on the “bread and butter” issues affecting New Zealanders.
He announced the 25 cents per litre excise cut would be extended to June 30, as would road user charge discounts. Half-price public transport would also now continue until then – estimated to be saving someone who pays two $5 fares a day $25 a week. It is expected to cost an extra $718 million.
Half-price public transport would be permanent for about one million community service card holders, including students, from July 1.
It is the fourth time Labour has extended the provisions which were first introduced in March 2022 and intended as a temporary respite from soaring fuel prices and wider inflation.
Hipkins said the measure was “a start” - and further cost of living measures would be at the centre of his thinking ahead of the May Budget.
However, extending the fuel cuts and public transport subsidies was something the Government could do quickly to help families – and transport was a big cost for most.
He had promised when he took over as Prime Minister to focus on the issues that were affecting people in the here and now – and the Auckland and upper North Island floods of the last week had emphasised the importance of that. He said those floods would put extra stress and financial strain on many families, and this was something the Government could move on quickly to try to ease it a bit.
“It’s been a lot. And it’s been lot on the top of the last few years, first with Covid and then the economic tail caused by that. So I get that households are thinking hard about their budgets and businesses about their costs.”
He said it would help take the edge off high fuel costs which put pressure on families and those on fixed incomes who often had no choice but to fill up their cars.
It is a reversal of last December’s decision to halt the subsidies in March.
Finance Minister Grant Robertson said the difference between now and then was partly the new Prime Minister who had asked ministers to get the cost of living top of the agenda.
He said things had changed and this was an issue “in the here and now”.
“We’ve taken another look, we have changed our decision,” Robertson said.
He said the Government had found enough funding to fund the extension from looking through the money previously allocated to other things, and deciding if it was still needed.
A new Budget period would begin on July 1 – and Robertson said the Government would make further decisions in the Budget process. He said it was a balance between fiscal policy and supporting New Zealanders.
He said the cost of food was one of the major issues facing New Zealand, “everyone can see it” - and the cost of transport affected that.
National Party leader Christopher Luxon told reporters this afternoon in Auckland: “What we’ve seen over yesterday and again today, is new leader, same Labour, same old tired ideas.”
He said wages were not keeping pace with inflation, and the Government’s recent announcement will not address the underlying cause of inflation.
Hipkins’ extension of the fuel tax reduction and public transport discount was “really underwhelming”, Luxon said.
”What New Zealand needs is a proper economic plan to tackle the underlying causes of inflation.”
Act leader David Seymour also criticised the announcement as “dumb, election year populism.” Seymour said oil prices were now back down and it was “time to rip the band-aid off”.
“Last year, Act told the Government that ‘there’s nothing more permanent than a temporary Government programme,’ and Chris Hipkins has proved us right by kicking the petrol tax cut down the road yet again.”
Green Party co-leader James Shaw also criticised the move, saying direct support to low-income households should be given rather than “subsidising fossil fuels during a climate crisis.”
“Auckland has just experienced first-hand the devastating impacts of climate change. It just doesn’t make sense to be extending subsidies for fossil fuels,” Shaw said.
“Subsidising petrol for everyone, including the highest income earners, is not the answer.”
Hipkins said the Government’s work on climate change and emission reduction would continue - in the long term they want to reduce reliance on fossil fuels but this is a “here and now” thing for Kiwi families.
He dismissed criticism that it benefited those on higher incomes more, saying that it also helped those on lower and fixed incomes. “We know that they don’t have a choice but to fill the car up. They rely on that to get to work. It’s a fixed cost that they simply cannot avoid.”
The measures were due to start winding down from the end of February when the fuel cuts were set to halve before ending completely at the end of March.
Announcing that in December, Finance Minister Grant Robertson said it would be the last extension for the costly measure, which has so far cost about $1.4 billion, most in the fuel tax cuts. The public transport element has cost $100m to $160m.
Late last year, a Taxpayers’ Union-Curia Poll found 71 per cent of respondents wanted the cut extended until inflation was under 3 per cent. Just 15 per cent of people said they did not want the cut extended after its scheduled January expiry date. Fourteen per cent of respondents were unsure.
Hipkins’ visit to Auckland coincides with another morning of major flooding in Auckland.
He is also meeting emergency operations staff and visiting the North Shore, before spending more time in the city tomorrow ahead of Waitangi Day.
Yesterday, Hipkins announced his reshuffle, including appointing Michael Wood as Minister for Auckland – a new portfolio in this Government.
Earlier, Hipkins visited the Moana Nui A Kiwa Hub in Māngere, where affected residents could a range of different support from finding living solutions through to budgeting and household products.
Many of those seeking assistance had become temporarily homeless due to the flooding.
Mele Fehoko, her husband and five children had to move out of their home after the flooding on Friday night, and were now staying with her parents in a two-bedroom house.
Teakai Rasmussen and her son Gabriel Rasmussen John had to leave their home in rising floodwaters on Friday evening.
Teakai’s biggest worry was her son, who is autistic, and her mother, who was in a wheelchair and on dialysis. Her two other sons carried her out on Friday night through waist-deep water in their home.
“We thought at the start it was going away, then the next minute we turned around and the water was coming through the doors.”
It quickly rose to waist-deep in their home, and they rang emergency services for support.
All 10 family members in the Kāinga Ora property at the time managed to get out unscathed, but Teakai said nearly all of their possessions had been damaged.
“I feel devastated and lost. It’s a feeling you can’t really describe.
“I am so stressed out, and it’s played with my mental health. When I sleep at night, all my dreams are about the floods.”
Teakai said at the moment all of the family was spread out across other families they could stay with.
She Kāinga Ora had been supportive and was working to find them a longer-term solution.
Luxon also spent the day visiting those affected by the floods and various organisations offering support.
He pitched in helping carry supplies at the Ranui Baptist Church in West Auckland.
Luxon told the Herald the response to the devastating floods had “brought out the best in New Zealanders”.
He said from the past few days visiting various centres and speaking to experts it was clear Auckland had not been prepared for the flooding.
He said there needed to be a proper review of the emergency response. He’d witnessed from living in the United States how lessons were learned after Hurricane Katrina, and with climate change increasing the likelihood of flooding here it should be a learning moment for New Zealand.
“I lived in America for a long time and you know what I saw when we had extreme hurricane events or, or snow weather warnings, was there was lots of advanced notice states of emergency declared really early.
“People had time to prepare and we’re going to get better at that side of it and I hope we can learn from this.”
A Chinese cameraman brought a unique camera to film Luxon in Beijing.