Source: Radio New Zealand
Prime Minister Christopher Luxon said the support offered so far was about protecting the the most vulnerable, without driving up inflation. RNZ / Samuel Rillstone
The prime minister is reluctant to say whether there will be any further support for New Zealanders during the fuel crisis, but believes New Zealanders will “understand.”
Ministers will meet with major businesses later in the week to get their perspectives on what may be required, should fuel supply become disrupted further.
The government has so far temporarily boosted the in-work tax credit to $50 a week for around 143,000 lower-income families, while also expanding eligibility to a further 14,000 families, to receive the credit at a reduced rate.
It has also temporarily increased mileage rates by 30 percent for home and community support workers.
Over the last few weeks, the government has repeated that any support would be “timely, temporary, and targeted”.
On Monday, Christopher Luxon would not commit to expanding support, saying while it “will look” for support for those that are “most vulnerable,” the government could not afford to do “everything for everyone,” and that most New Zealanders would understand.
“We cannot alleviate the pressure for everybody, but we do have a framework around timely, targeted, temporary support, which I think most New Zealanders would understand and appreciate. And they also appreciate and understand that we have a job to do to protect their long-term interests and that of the economy too.”
Luxon said the support offered so far was about protecting the the most vulnerable, without driving up inflation.
“I have to protect the long-term future of New Zealanders as well, and actually making sure that we actually aren’t running up inflation and interest rates.”
The government is unlikely to take measures similar to Australia, and cut the fuel excise tax or road user charges for heavy vehicles.
While saying diesel was the “lifeblood” of the economy, and sectors like farming and construction relied on it, Luxon stopped short of saying whether there would be any support, but pointed to meetings the government was having and would be having with high diesel users.
“It is understandable that diesel users want relief from rising prices, and we are acutely aware of the pressure that all Kiwis are feeling. But seeking to alleviate that pressure for everyone would be unaffordable and irresponsible.”
One thing the government is likely to do is abandon plans to raise the fuel excise tax. A 12 cent increase is due to come in January, but the transport minister, finance minister, and prime minister are signalling it will be postponed, or dropped altogether.
Luxon said while legislation would need to be passed, Cabinet had not made a decision.
“We recognise that there’s going to be elevated fuel prices for some time, and it just seems like stalling that or deferring that will be probably the wisest course of action,” he said, while acknowledging a deferral would cause challenges to the National Land Transport Fund.
“If there is a fall-off in revenue that’s being raised, the reality is we have to be straight with New Zealanders and say we might have to make some choices and trade-offs, and I think that’s OK to do that.”
Sectors such as farming, construction, and aviation have been warning of the impacts of the fuel crisis on their businesses.
Asked whether there would be support for businesses affected by the crisis, particularly any that were facing going under, Luxon said many businesses and households were doing it tough, but the government would not be spraying around money “in a cash bazooka.”
Ministers to meet with major businesses this week
Luxon said there had already been lots of industry engagement, and there would be more over the coming week.
The government had been talking to the aviation sector over jet fuel, as well as high diesel users, and the finance minister has spoken to banking chief executives with an expectation they “stand by” companies that may be high consumers of diesel in the short term.
Ministers would also be talking to the Major Companies Group (MCG), which RNZ understands will happen on Thursday.
The Major Companies Group is an advocacy group, under the BusinessNZ umbrella.
It represents over 170 companies, including the likes of Spark, Foodstuffs, Vector, Zespri, and Fonterra, as well as ports, airports, construction firms, fuel companies, and major banks and insurance companies.
“We don’t want to repeat the mistake where we happen to industry. We want to work with industry, because in many ways we see them being quite critical for actually solving some of the challenges we may incur should we get a fuel disruption in the future,” Luxon said.
“It’s just about making sure that we all have a common understanding of what’s required. We know it’s incredibly difficult, particularly for our diesel users, in particular. That means that many of them, frankly, are having to put fuel surcharges in place and pass those costs on to their customers.”
BusinessNZ’s chief executive Katherine Rich said the “situation update” between ministers and the MCG would provide an opportunity to ask questions and share direct business perspectives.
Rich said businesses wanted to see a level playing field when it came to timely and accurate information from the government.
“It has been positive to see early planning, strong consultation with relevant firms, clear phases, and a continued reliance on market settings and supply chain expertise before intervention. That discipline matters, particularly for business continuity and economic stability,” she said.
BusinessNZ’s fuel company members were working closely with suppliers, and Rich said they currently did not see it as a supply problem, but a price issue.
“Many have been reluctant to pass on higher costs in the short term, in the expectation that the situation may stabilise,” she said.
Under Phase Three of the government’s National Fuel Plan, critical transport services like road freight for supermarket and grocery supply chains sit in Band B of the priority bands.
Phases Three and Four are still under consultation, with the finance minister on Monday saying she would make further announcements in the next few weeks.
Rich suggested the fuel plan would be strengthened further if the food and grocery sector was elevated to the ‘life-supporting’ Band A, recognising its “critical role in maintaining continuity of supply for households.”
BusinessNZ’s director of advocacy Catherine Beard has also been seconded into the Ministry of Business, Innovation, and Employment’s response team, which Rich said would “contribute real-time business insight and supply chain expertise” to ensure operational realities were well understood as decisions were made.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand