The Government is expanding cost of living support by extending reductions to fuel excise duty, road user charges, and public transport by more than five months until the end of January next year.
In March, the Government announced it was cutting fuel excise tax by 25 cents a litre and road user charges by equivalent levels, along with halving public transport fares in response to cost of living pressures. This was extended at the time of the Budget and now is being extended again to January 31, 2023.
Finance Minister Grant Robertson said during Sunday's announcement that the cut to fuel excise reduces the cost of filling up a 40 litre tank of petrol by over $11, and for a 60 litre tank, over $17. Half-price public transport sees an average person who pays two $5 fares a day save $25 a week.
Treasury estimates the combined impacts of this policy will reduce headline inflation by 0.5 percentage points in the June 2022 quarter.
"There's no easy fix for the cost of living, but we're taking a range of actions to ease the pressure on families," Robertson said.
"In the case of today's announcement we know that the rising price of fuel has a direct effect on inflation, and making these changes is a targeted approach to a root cause of the cost of living pressure being faced by Kiwi households."
Transport Minister Michael Wood said since half-price fares were introduced on April 1, public transport use has increased in the three largest centres: Auckland, Wellington, and Christchurch.
"We know this makes a real difference for people feeling cost of living pressures, particularly lower-income households," he said.
Since half-price public transport will be available for all New Zealanders until the end of January, the Community Connect scheme, which gives Community Service Card holders a permanent 50 percent discount off adult fares on selected bus, train, and ferry services, will now start on February 1 next year. This will give more time for local authorities to put the required systems in place to efficiently administer the scheme, Wood said.
"Extending the reductions to fuel excise duty and road user charges will also help to reduce the fuel burden on the road transport sector, and in doing so keeping the cost of food and essential goods lower," he added.
Extending the fuel excise and reductions to road user charges until the end of January is estimated to cost $589 million. This money goes directly to the National Land Transport Fund to pay for building and maintaining roads and funding public transport, walking, and cycling initiatives. The cost to extend half-price public transport is an estimated $63.1 million.
"In the end of financial year wash up we have identified funding that we can re-prioritise to meet these costs and top up the National Land Transport Fund, in particular from lower than forecast write-offs from the Small Business Cashflow Loan Scheme, and money remaining in the COVID Support Payment allocation," Robertson said.
Other support the Government has already announced includes a temporary cost of living payment of $350, paid over three months from August to New Zealanders who earned under $70,000 over the last tax year and who are not eligible for the Winter Energy Payment. There have also been increases to Working for Families, Superannuation, student allowances, and main benefits, as well as free school lunches for more than 211,000 children.
