Ian McKelvie: Soaring fuel price hits rural areas hard

The Government is continuing to price Kiwis out of their cars with record high petrol prices.

On September 30, the excise duty on petrol was increased by 3.5 cents a litre, and there will be further 3.5 cent increases in 2019 and 2020.

As a result, petrol prices have increased by an average of 42 cents a litre since last year's election.

The price for 91 has risen above $2.40 a litre and the harsh reality is it could get close to $3 by the end of the year.

Meanwhile, with this month's 3.5 cent hike — plus the GST on the fuel price increase — the Government is set to net an additional $220 million a year. Despite a concerted effort by them to play down the effects of the increases on ordinary Kiwis, the reality is impossible to ignore.

Their spin suggests the average New Zealand household is now paying $200 a year more in petrol taxes than this time last year. In Auckland they estimate the figure is $324 a year.

But in rural and provincial New Zealand we know these numbers don't add up. For a start they've based their conservative estimates on households fuelling-up to travel 100km per week.

For many in the Rangitikei, our odometers can clock up 400km-plus a week. And the Government is reaping the rewards because every time a New Zealander puts $1 of fuel in their vehicle, 53 cents goes straight into their back pocket.

So let's be clear — this is a regressive tax. Any claims otherwise fail to acknowledge the fact that low income households and those who, by virtue of geography or because they travel some distance to work, pay a much higher percentage of their total income on fuel than higher income households or those who live and work in the city.

This Government fails to understand that petrol is typically a fixed cost for families and businesses.

It is the cost of getting kids to school and groceries home from the supermarket. It is the cost of getting goods and services to your customers and stock to the works.

Extra petrol costs put pressure on consumers and businesses to cut back on their discretionary spending, which will inevitably lead to an economic slowdown.

With over half of each dollar Kiwis spend on fuel going to the Government, we should be seeing more funding in our region, with a focus on improving safety and congestion.
But they pulled $5 billion of funding from a number of state highway projects and allocated that money to fund a tram set for Auckland. The end result is fewer roads will be upgraded, including the Otaki to Levin section of the Wellington northern corridor.

Now our fuel prices are out of control, our regions are in limbo and rural and provincial New Zealanders and those on low incomes throughout the country have been hit hardest.

Ian McKelvie is MP for Rangitikei