Venu Menon
Wellington, August 17,2023
The House witnessed an animated debate on the government’s tax and spending decisions with Minister of Finance Grant Robertson justifying the petrol tax increase in the midst of a cost-of-living crisis.
He said the government’s policy statement on transport announced on Thursday foresaw fuel tax hikes on the grounds that “inflation is starting to come down but is not where any of us would be comfortable with it.”
Robertson said it was important for the government to source its funding. “Every cent of Fuel Excise Duty (FED) and Road User Charges (RUC) goes into our transport network.”
However, Nicola Willis, Deputy Leader of the National Party, pointed to the Reserve Bank’s forecast that inflation would remain out of control in July next year and out of its target band. “So, New Zealanders will be paying higher prices across the economy, and why, in that context, does he also want to increase the amount of tax in their petrol?”
But Robertson reiterated that the fuel tax hike was necessary to fund the government’s transport plan.
“If we’re going to build roads, if we’re going to build rail, if we’re going to have public transport, it has to be paid for. That’s come through FED and RUC,” Robertson declared.
Willis reminded the minister that he had reduced the fuel excise tax a few months ago to ease the cost-of-living crisis and accused him of flip-flopping “by saying he’ll now increase petrol tax despite the cost-of-living crisis persisting.”
But Robertson persisted that the average motorist will pay 44 cents a week to help pay for New Zealand’s transport needs.
“Every single cent of fuel excise duty and road user charges goes directly to public transport, to roads, to rail- that’s how we fund the system,” the minister stressed.
Robertson told members that the economy was resilient with wages rising faster than inflation. He cited a Statistics New Zealand report that the median weekly earnings from wages and salaries had “jumped by 7.1% in the June 2023 year, the second-largest annual increase since records began in 1998, surpassed only by the previous year’s annual increase.”
The minister said women’s median weekly earnings had increased by 8.1% for the June year, “also the second-highest annual percentage increase on record.” The minister cited Stats NZ data that showed that the median hourly earnings from wages and salaries had risen 6.6% in the year to June 2023. “This was the second–largest annual percentage increase in median hourly earnings,” Robertson pointed out.
He said cheaper childcare, free prescriptions, and half-price public transport for young Kiwis had eased pressure on family budgets. The winter energy payment also provided cost-of-living relief for those eligible for it.
“We also know that we have to do our bit, and real government consumption is forecast to fall by 5% by the beginning of 2025,” the minister noted, adding, “We’ve got record numbers of people in work, wages are rising faster than inflation, tourists are returning in greater numbers, and overseas workers are filling vacancies.”
Venu Menon is an Indian Newslink reporter based in Wellington
