Cost of living support extended for families and businesses

The Government is providing extra cost of living support to families and businesses, delivering on new Prime Minister Chris Hipkins’ promise of a greater focus on the issues facing New Zealanders right now.

“I’ve said bread and butter issues like the cost of living would be my top priority. This is our first step in dealing with some of the persistent cost pressures on businesses and families,” Chris Hipkins said.

“Reducing the cost of fuel excise and public transport is a good candidate for early action – it’s a major cost for nearly everyone, we know how to do it, and can roll it out quickly.

“It is a small and meaningful first step in an ongoing series of measures to help with some of the persistent cost pressures on businesses and families.

“We can deliver to under pressure businesses and families fast. Transport is the third biggest expense on households after housing and food, so this is a policy that makes a real difference right now.

“The floods in Auckland and Northland are putting extra stress and financial pressure on families. Cutting fuel excise and keeping half price public transport gives some extra relief as Auckland goes through a difficult period.

“New Zealanders understand we’re facing international pressures that are driving up inflation and prices. This policy won’t solve the crisis, but it will make a difference. I know that every bit helps,” Chris Hipkins said.

“With economists forecasting New Zealand’s inflation to remain at elevated levels for longer than we’ve seen in the past, we have decided to revisit our decision on the transport support package,” Grant Robertson said.

“We know that increases in the price of food is hitting families hard. A significant component of those costs come from fuel. Extending the cut to fuel excise and Road User Charges will have a meaningful impact through reducing these costs.

“It is also a good policy for business. The cost of freight and running car fleets is a big cost for many businesses, so this extension helps relieve a bit of pressure on those doing it tough right now.

“This policy is also a practical way to help take the edge off inflation. The Treasury estimated the combined impacts of this policy reduced headline inflation by 0.5 percentage points in the June 2022 quarter. So it is a good policy to fight inflation while also helping the hip pocket now.

“The cut to fuel excise reduces the cost of filling up a 40 litre tank of petrol by around $11.50, and for a 60 litre tank, around $17.25 and half price public transport will save an average person who pays two $5 fares a day $25 a week.

“The extension of all measures is estimated to cost about $718 million. I believe this is the right thing to do for New Zealand families. We can strike a balance between targeted ongoing support and careful management of the Government accounts. We are paying for the extension from savings identified in the most recent baseline update.

“This extension takes us to the end of the financial year. We have already indicated that the Budget will have a cost of living focus, and this extension covers the time until that comes into force,” Grant Robertson said.

The petrol excise duty cut will be 25 cents per litre until the end of June.

Half price fares for public transport will be extended until the end of June, after which they will be made permanently half price for people with Community Service Cards as previously announced.

“Supporting people onto affordable public transport helps to take pressure off our roads and is good for the climate,” Michael Wood said.

“We know that people have responded to December’s announcement and pre-purchased Road User Charges to cover them for coming month. This provides time for us to introduce legislation to reintroduce the discount, which will be in place until 30 June.

“These measures will make a real difference for people feeling cost of living pressures. Extending the reductions to fuel excise duty and road user charges will also help to reduce the road transport sector’s fuel costs, and in doing so keeping the cost of food and essential goods lower.

“The cost of living remains the number one issue for New Zealanders and it is the number one priority for the Government,” Michael Wood said.

Summary

• 25 cents per litre petrol excise duty cut extended to 30 June 2023 – reducing an average 60 litre tank of petrol by $17.25
• Road User Charge discount will be re-introduced and continue through until 30 June
• Half price public transport fares extended to the end of June 2023 saving an average person who pays two $5 fares a day $25 a week
• Half price public transport made permanent to around one million Community Service Card holders, including tertiary students, from 1 July 2023

Image credit: Towfiqu barbhuiya