Ahead of the inflation figure announcement today, the government announced the extension at a Sunday afternoon press conference, writes Anna Rawhiti-Connell in The Bulletin.
Minister says extension should lead to lower food prices
Yesterday, the government announced it will be extending reductions on fuel excise duty, road user charges (RUCs) and half price public transport fares until the end of January 2023. Finance minister Grant Robertson and energy minister Megan Woods made the announcement in a press conference that the media weren’t told about until Sunday morning. Transport minister Michael Wood said it will lead to lower prices for things like food because it would reduce the cost of transporting them around the country. As the Herald’s Thomas Coughlan reports, the government is under increasing pressure about domestic drivers of inflation.
Timing of announcement questioned with inflation figures out today
As 1 News’s Maiki Sherman pointed out, some people might be cynical about the timing, with consumer price index inflation figures due to be published today. ANZ bank is forecasting the rate to be 7.1%. Kiwibank chief economist Jarrod Kerr says a figure outside the band of 7% to 7.2% had the potential to move the market and feed through to retail interest rates. Robertson cited busy ministerial travel dairies when asked about the timing. National Party finance spokeswoman Nicola Willis questioned the timing, saying it was more “band-aid economics” and that the government “must restore discipline to its own spending”.
Act says government making it up as it goes along
The Act party’s David Seymour also cited an example of Auckland Transport selling discounts in malls recently, designed to smooth the return to full price fares which were due to be reinstated on August 31. “That marketing effort is now worthless,” he said. Eric Crampton, chief economist at the New Zealand Initiative, recently detailed correspondence between the New Zealand Transport Agency Waka Kotahi and Ministry of Transport officials ahead of the March announcement that summises the policy work was done in 24 hours. Transport minister Michael Wood said it “was a relatively short period of time, but it was longer than 24 hours’’.
Policy designed to give New Zealanders certainty but can’t go on forever
Robertson said the policy couldn’t go on forever and he was acutely aware that “having a ‘D Day’’ where it drops off straight away has certain consequences”. Writing this morning, Stuff’s political editor Luke Malpass says there’s a zero to zilch chance of the full excise, public transport fares and RUCs being reinstated before the election. Robertson also said they were expecting inflation to drop off over the second half of the year, crude oil prices to come down and wages to rise. Overseas, Spain has just announced free train travel for the rest of the year to tackle the cost of living and Germany has had great success with its €9 travel pass. Green Party spokesperson for transport, Julie Anne Genter, recently said that the three months of lost fuel tax revenue could have been used to future-proof lower North Island commuter rail.