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Chris Hipkins confirms fuel excise cut, public transport support to be extended until June

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Prime Minister Chris Hipkins who is in Auckland today has confirmed the cut to the fuel excise tax and half-price public transport will be extended until the end of June.

He has been speaking to media after further heavy rain in some areas of the city overnight.

Hipkins says he was shown around the Moana-nui-a-kiwa hub this morning and was impressed with the support it is providing to the people of South Auckland.

“It’s an incredible effort and it’s so heartwarming to see the community rallying around to help others.”

He acknowledges the volunteers and workers across Auckland and New Zealand who have shown care to people who “in many instances have lost most of their stuff, and are in desperate need”.

He says the events of the last week highlight the importance of his decision to refocus his new Cabinet on the cost of living, which he signalled when he was named Jacinda Ardern’s successor as Prime Minister.

“It’s been a lot. And it’s been a lot on top of the last few years – first with Covid and then with the economic tail that was caused by that – so I get that households are thinking hard about their budgets and businesses about their costs,” the prime minister says.

He confirms the government will extend the 25-cent cut to petrol excise, to 30 June, saying it “reduces” the cost of an average 60-litre tank of petrol by $17.25. With the subsidy already in place however, it’s not so much a reduction as it is a refusal to see those costs go back up.

Half-price public transport will also continue to the end of June.

“These discounts were due to be phased out in the coming months but with global inflation pressure forecast to keep our rate around the 7 percent mark for longer, it’s important we keep providing support to families and businesses who need it.

“This is a start – it’s a meaningful step in an ongoing series of measures to help with some of the most persistent cost pressures.”

He says it was a good candidate for early action because it was a major cost for nearly everybody and could be done quickly.

“It’s also important for those experiencing the flooding here in Auckland which is putting extra stress and financial pressure on families. This policy alone won’t solve the cost-of-living crisis that we face but it will make a difference and right now I know that every little bit helps.”

Asked what can be done to bring down food prices, Hipkins says today’s announcement will have an impact because it will stop prices rising further due to the cost off moving goods around.

He says there is a lot of work under way to address emissions reduction, “but we also have to acknowledge that right here and right now an increase in fuel costs is putting a significant amount of pressure on families who have no choice but to continue to fill up the car”.

Finance Minister Grant Robertson who is also at the briefing says he took Hipkins’ request to think about what could be done to reduce the cost of living seriously.

“I … went away with the minister of transport and others and came back to the prime minister with this proposal. It’s important that we do as the prime minister’s just said – deal with the here and now as well as the long term.

“When we think about what’s the best thing that we can do quickly, this is it.”

Robertson says sufficient funding was found to be able to afford the extension and the government will take a look through the budget process at further ways to support New Zealanders with the cost of living.

“We’ve got to strike a balance here … we want to make sure that we keep the fiscal picture strong, that we support monetary policy with our fiscal policy. We also want to make sure we support New Zealand families and households to be able to take the hard edges off the cost of living crisis.

“Bear in mind this actually reduces the rate of CPI [the Consumer Price Index, one measure of inflation].”

Asked if he got it wrong when he said in December further extensions were not sustainable, Robertson says things have changed.

“We’ve got an issue in the here and now. Inflation, it’s steadied but it hasn’t come down significantly. We know New Zealanders are facing this cost of living crisis every day, we’ve taken another look. We have changed our decision, we’re not denying that at all but we have taken another look, and we acknowledge the circumstances New Zealanders are in and we’re doing everything we can to help.”

Transport Minister Michael Wood says public transport providers have all welcomed the support that has been provided and the government will be determined that people using public transport will see the effects.

He says the setting of fares at the local level is a matter for councils and local public transport authorities.

The Auckland Transport board approved a 6.5 percent fare increase at their meeting in December, subject to approval by Auckland Council’s council’s governing body. If the increses are introduced, they are due to take effect at the end of this month.

“The step that we are taking here is a really significant one and it halves the cost of what people are paying, whatever the baseline fare is,” Wood says.

Wood thanks the city’s bus drivers “who have gone over and above to keep people connected through what’s been a crisis period for our city. They’ve done an extraordinary job under real pressure as they have for the past couple of years”.

Hipkins says insurance companies are cooperating well together and working to provide timely resolutions for people, and he and Robertson have both been in contact with the companies to ensure they are providing as timely a response as possible.

Hipkins says, regarding the weather crisis affecting the country’s northern regions, insurance companies are cooperating well together and working to provide timely resolutions for people. He and Robertson have both been in contact with the companies to ensure they are providing as timely a response as possible.

“I’m never in the rule-in, rule-out, forever for all time category [on] just about anything, but actually I think right now the focus has to be on making sure New Zealanders can get through the economic situation we’re in.”

Robertson says the Auckland flooding is probably the most significant non-earthquake event New Zealand has had to deal with in terms of insurance, and the new process that sees property owners dealing first with insurers who then deal with EQC is working very well.

“While the EQC fund is one element, as I say governments always have topped that up if they need to do that. Our job is to look after people, help people recover. Insurance is a very important part of that.”

The prime minsiter says the situation around schools will be kept under review on a daily basis, but likening it to a Covid lockdown “is simplistic and not really appropriate in the circumstances”.

He says right now we’re still in the emergency response and the time will come for going back and ensuring a thorough review at all levels is done afterwards – now is not the time.

Prime Minister Chris Hipkins, centre, Emergency Management Minister Kieran McAnulty, left, and Finance Minister Grant Robertson at the Moana Nui A Kiwa Hub, for the south Auckland response to the flooding, in Māngere, 1 Febraury 2023.

Kieran McAnulty, left, Chris Hipkins, centre, and Grant Robertson, right, at the Moana Nui A Kiwa Hub which they visited before the briefing.
Photo: RNZ / Samuel Rillstone

Fuel excise cuts, half-price public transport tipped to be extended

Beforehand Hipkins was expected to confirm plans to continue with fuel excise cuts and half-price public transport for the fourth time.

The subsidies were first introduced in March last year as a temporary measure, to help New Zealanders facing rising costs due to international fuel prices which spiked after the Russian invasion of Ukraine and other inflation pressures.

Advice from government agencies has consistently urged the government to bring these subsidies to an end, and Finance Minister Grant Robertson noted in December it “wasn’t sustainable to continue to subsidise the cost of petrol indefinitely for everyone”.

The move – along with a cut to Road User Charges (RUCs) – has however also been recognised as having helped control inflation. The RUC discount ended on Tuesday.

Asked about that after yesterday’s Cabinet meeting, Hipkins said he would not be making announcements about that yet but “the decisions we took still stand, I acknowledge that the trucking industry’s been given significant notice that that was going to happen”.

At the same media briefing, Hipkins also announced the long-signalled Cabinet reshuffle.

It included demotions for Nanaia Mahuta and Andrew Little in favour of Jan Tinetti, Michael Wood, Ayesha Verrall, Willie Jackson and Kiri Allan.

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