UPDATED. Read Gordon Campbell on the political costs of the price rises.
The Automobile Association (AA) Breakdown
While my sympathy goes out to those protesting the increase in petrol prices we need to ask why Government is taking what they must know is an unpopular action, becoming even more unpopular when September's 3c/l increase is followed by two more 3c/l increases over the next two years.
Firstly, we need to note, as the AA has observed, that NZ has the 6th lowest fuel costs in the OECD where the fuel tax in some countries accounts for over two-thirds of fuel prices. Ours is still under one-third.
Secondly, that not all the increase is due to tax. The AA has said recent increases by the big fuel suppliers were unjustified with....
... for example, BP which paid $300m of its profits to its London HQ in 2015, and with Z Energy increasing its shareholder dividend by $200m.
If the big suppliers do not regulate themselves, Government regulation may not be too far over the horizon. (See Related at end of this posting.)
Thirdly, we need to recognize that decades of neglect has resulted in today's grossly inadequate public roading and rail systems, as successive national and local governments feared raising taxes that could lose them support and even elections.
Fourthly, few would dispute that major work is needed to improve our land transport efficiency, with particular attention given to where we live and how we travel to work.
- Urban growth continues to impinge on rural land
- Commuters travel greater distances,
- No serious efforts have been made in decentralizaton and regional development, or reviewing
- Sharing public infrastructure costs with the private sector.
- Public transport needs massive reconnects.
Fifthly, unless Government takes further action, fuel price increases place a proportionally higher burden on the poor and others with little discretionary income who have to use their car to get to work. Its Family Package will help but lower personal taxes and/or GST exceptions need further consideration.
The AA think government should remove GST on fuel (which would help the poor) and ensure that all the tax is paid on road transport. At present, 19c is spent for other purposes.
Finally, we need to note that a major shortcoming of democracies is their combative format. One side is pitted against the other, with both sides rarely in agreement.
This has the advantage of being a check on Government, but it can result in many essential decisions -- that will bring long-term benefits to all -- being avoided or deferred ---because of short-term political expediency.
The belated fuel tax is an example. Aucklanders and others are now paying for what they have avoided paying in council rates over the years.
Fuel taxes have become a political football.
Simon Bridges says National did not increase tax because of advice that new roads, etc., could be paid for out of existing funding. Jacinda Adern disputes this, saying the advice was that tax would need to increase by 10-20c -- not much different from the Government's planned take. National says it will abolish the taxes if returned to Government, taking us back to square one.
The county needs its politicians to show more unity on this important issue.
Government to check on fuel companies. Largest take in OECD countries. https://www.radionz.co.nz/news/national/368200/ardern-speeds-up-law-change-to-tackle-soaring-petrol-prices