End of fuel relief will increase price of everyday products, Transporting NZ says

Sunday, 22 January 2023

The rising cost to supply produce to retail supermarkets is responsible for most price increases, up 24% in the last year.

Businesses and consumers should prepare for a double-whammy of the return of road user charges and Russian diesel sanctions that will increase the price they pay for everyday goods, a transport leader says.

Ia Ara Aotearoa Transporting New Zealand, which lobbies in the interest of transport operators, predicted the return of Government taxes on fuels and the sanctions would increase the cost of running a 45-plus tonne truck and trailer travelling 100,000 km by $21,000 a year.

“Data from Waka Kotahi shows that freight costs can make up more than 12% of the cost of groceries alone,” chief executive Nick Leggett said.

On January 31, the Government’s Transport Support Package that has helped keep the cost of fuel down will expire, and road user charges (RUCs) will increase, once the 36% discount was removed.

* Minister indicates fuel tax break could be extended, as inflation gets political

* Price of diesel soars as Russia sanctions put the heat on oil supply

Last year, Ia Ara Aotearoa Transporting New Zealand predicted some trucking companies could fail due to the increased cost of fuel.

“With 93% of New Zealand’s freight being transported by trucks, those RUC increases are going to be felt across the whole economy.”

Leggett said Transporting NZ wanted to remind people that increases to the price of petrol were just around the corner.

He said he was encouraged by statements made on Sunday by Prime Minister-elect Chris Hipkins that his leadership would signal some key Labour projects would be slowed as the country grappled a raft of economic issues.

Hipkins had not mentioned road user charges specifically, but Leggett said he hoped the new Labour leader would consider extending the relief package introduced in March last year.

Additional sanctions from the European Union, G7, and Australia in response to Russia’s invasion of Ukraine were also expected to cause significant disruptions to the international fuel supply chain and drive diesel prices higher.

Leggett said New Zealand consumers would not be insulated from these cost increases.

Transporting New Zealand renewed its call for the Government to maintain RUC, fuel excise and public transportation discounts until CPI increases fell below 6%.

“We’re not asking for a permanent extension, but we don’t want to see cost pressures piled on while inflation is still roaring,” Leggett said.

“The Government was also wagering that fuel prices would fall significantly in 2023, but it’s now clear we aren’t out of the woods yet.

“With ongoing international supply chain challenges and domestic inflation forecasts remaining high through 2023, it isn’t the right time for the Government to increase costs on households and businesses.”

Fuel excise taxes were cut by 25 cents a litre in March to deal with high prices, initially for three months.