Fuel price crisis: Business groups welcome the price reduction but the Government needs to look beyond the three-month period, they say

Business groups in the country welcome the new price cuts for petrol and the halving of public transport fares for three months, but they want the Government to look at a broader plan which extends beyond the three-month period.

Hospitality NZ chief executive Julie White said, the 25 cents reduction in excise duty on petrol is welcomed by hospitality and accommodation businesses but the Government needs to deliver on a broader plan of how they will help alleviate long-term cost pressures.

“Everyone needs urgent relief at this time of a cost-of-living crisis, so this was an essential move, but more will likely be needed because we could soon be paying $3.75 a litre even with the reduction, based on predictions at the weekend of the price reaching $4.

“The price of petrol affects the price of everything our businesses use, particularly food and beverage, and continuing hikes will only make a tough situation even tougher,” White said.

“They come after food prices rose 5.9 per cent in the past year, with fresh fruit and veges up 15 per cent.

“Hospitality and accommodation businesses simply cannot absorb the additional costs caused by petrol price hikes on top of those food increases as they continue to struggle as a result of the Covid-19 downturn,” she said.

“Unfortunately, they will still have to put prices up, and that will hurt consumers and keep more of them away. It’s a vicious cycle. Higher petrol prices also put a damper on people going out for a coffee or a meal or travelling domestically.

“This is a timely reminder to the Government on how it collects taxes because fuel is an essential commodity whose price affects every part of the economy.

“But it’s not just petrol prices and it’s not just now,” she said.

The new prices will come into effect from midnight tonight.

The Government is slashing fuel excise duties and road user charges by 25c a litre each from midnight.

Prime Minister Jacinda Ardern described the current situation as a “global energy crisis” after Russia’s invasion of Ukraine.

Cabinet had decided today to reduce fuel excise duties and road user charges by 25c a litre each, for the next three months. The change takes effect from 11.59pm tonight.

The Automobile Association’s (AA) principal policy adviser Terry Collins said his members will welcome the recent announcement by the Prime Minister for a huge reduction on petrol. Furthermore, he was very pleased that these price cuts will not affect the ongoing road works in the country.

“We welcome the announcement by the Prime Minister to reduce the fuel excise duty by 25 cents a litre, we have not seen reductions in the duty before and 36 per cent reduction is a significant reduction – that our members will welcome,” he said.

“Also [we’re] very pleased that it doesn’t impact on the funding of the national land transport fund.

All the preplanned roading projects and maintenance will be able to continue unhindered.

“There is much overdue work needed on our roads and we are very pleased that this announcement does not impact on the funding,” he said.

Auckland Mayor Phil Goff said he recognised the pressure the rising fuel prices had put on many Aucklanders’ budgets but has no plans to reduce the 11.5c a litre regional fuel tax.

“Suspending the regional fuel tax in current circumstances would worsen the crisis Auckland Transport faces with the loss of hundreds of millions of dollars in public transport fares because of Covid-19, while construction costs for new infrastructure and operating costs are rising rapidly.”

Any reduction in revenue in these circumstances would lead to the suspension of projects like the Eastern Busway, he said.

Goff welcomed the short-term relief from fuel prices and the halving of public transport fares for three months.

He said it would help people avoid higher fuel costs, look at public transport as an alternative way to travel with cheaper fares, and help a faster return to public transport after the sharp fall in patronage caused by the pandemic.

Canstar NZ General Manager Jose George said: “The temporary fuel tax relief announced today will help create some breathing room for households suffering from soaring petrol prices, along with other rising household costs.

“And while Government has announced this relief will be in place for three months, it’s impossible to know how long the global turmoil will disrupt fuel supplies and other essentials.

“The reality is external forces are likely to cause chaos in our economy for some time, and it will be challenging to manage household budgets given so much volatility.

“So while the Government has shifted a lever, it is a good time for Kiwis to consider their own personal budgets, and where they can cut costs or save money.

“It’s helpful to remember that just a few minutes of desktop research can deliver big savings across household basics like electricity, broadband, and food essentials,” George said.

Restaurant Association chief executive Marisa Bidois said these price cuts at the pump will certainly be helpful for managing costs in the food supply chain. The petrol price cuts and halving of costs on public transport will also be helpful for those staff members needing to get to and from work.

“We are also hopeful that the reduction in the cost of using public transport may also encourage more diners into our city centres which are struggling as a result of reduced patronage,” she said.

Auckland Action Against Poverty co-ordinator Brooke Stanley Pao said the announcement was weak and didn’t go far enough to help families in need.

“It’s not just petrol that’s going up. It’s one part of what’s impacting people’s lives at the moment. But we need to take into consideration the rising cost of food, rent, bills; all those things are going up. Inflation is the highest its been in the last 30 years.

“The Government can do a lot more in terms of helping to alleviate some of these costs for people. They could just make public transport free for all. Make it free forever. Remove all taxes from petrol and tax wealth instead to ensure that people that are really struggling can have a bit more money to be able to survive.”

Auckland Business Chamber chief executive, Michael Barnett said the Government has responded swiftly and decisively to ease the pain of volatile energy prices on consumers’ pockets cutting fuel excise duty and road user charges and halving public transport fare.

“They have acknowledged that there is an ongoing cost of living crisis, exacerbated by the global energy crisis, and have shown the decisive leadership New Zealanders expect and deserve,” Barnett said.

“They have been nimble. We all stand to save an expected $11.50-$17.25 per tank of fuel. Everyone benefits because everyone of us is hurt by ballooning fuel prices whether you are catching an Uber, travelling to work, doing the groceries, or moving freight and supplies around the city.”

Barnett said the Government had found savings and reprioritised spending from money committed in the Covid Fund to pay for the savings at the pump rather than adding to the national debt.

Source: Read Full Article