Nicola Willis: Finance Minister defends decision to delay fuel tax increases
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Why is the government delaying the planned fuel tax increase?
So we're getting to the crunchy bit of the campaign. Of course, where the promises are coming with massive bills, the government will not be adding twelve cents a litre to our pretel next year. Excise increases off. Five cents will be added in Jan of twenty eighth, then five cents every six months after that. Nicola Willis, Finance Minister, is with us. Good morning. Good morning, Mike. How about your rainy day fund of four hundred and fifty million dollars, eh? And about two days later it rains. How's that work?
Well, that was funding that we put to one side, acknowledging the elevated fuel prices uh arising from the uh conflict in the Middle East and to offset the costs of not increasing petrol tax next year.
How will the $1.4 billion top‑up to the Land Transport Fund be financed?
We're going to use that fund. We are also going to have to use general revenue to top up the land transport fund next year, which will would is cash that would otherwise be available for debt reduction or operating allowances. So This does come with a bill. It does come with a cost. There's no question about that. The judgment that Cabinet has made is that the first of January next year will not be the right time for a big hike in petrol taxes. But at the same time, we have to get the land transport system back onto a sustainable user pay system. So that's why we will be increasing petrol taxes in future years, doing that in a phased ground.
And that's what marks you out from Labour because they're doing not nothing of the sort, at least you are filling the gap. But the question is given we have less than no money, filling the gap from what? Because your four hundred and fifty was borrowed and your prefoo money's borrowed, so what are you cutting to pay or are you borrowing more?
What are the Treasury’s long‑term fiscal goals for surplus and debt reduction?
Well, you're right that that is cash that would otherwise have been available for debt reduction or operating allowances. What I've done is looked at the f forecast projections for the next few years and based on the preliminary forecasts that I'm receiving in the lead up to the pre election update, I'm confident that we can find that cash from the bottom line. And also stay on track for our fiscal strategy, which has those three key goals. Returning to surplus in the twenty eight, twenty-nine fiscal year, getting the debt curve bending down, and ensuring that we're reducing overall crown spending towards thirty percent of GDP over time. So nice and clear those were the three tests for me.
Sure. Nice and clear for the record, there will be no more borrowing.
Well, it is the case that we are forecasting borrowing over the next couple of years. No, no, no more borrowing
from what you've already forecast. Do you know what I'm asking?
Yes, this will not add to the debt project projections that I presented to you at the budget update, although I just want to be clear that that is one point four billion dollars that would have otherwise been available for additional debt reduction or for adding to future operating allowances. So it does come with a cost and I just want to be upfront about that.
How does the Finance Minister justify no new borrowing despite the cost?
Uh but we've judged that that is the right thing to do because we don't Want to lift New Zealanders' petrol taxes on the first of January next year. We don't think that's the right timing. But if you look at twenty twenty eight, which is when we're proposing to start those five cent hikes, that's a year in which GDP growth will be around double where it is at this year. Real wage growth will be positive, inflation is forecast to be coming down. We think that's a time when that uh petrol tax increase can Yeah. Whose
operating allowance are you stealing to pay for this? Who loses?
Well, that's funding that would otherwise be available for other things. There's a long there's a long laundry list where
So you you're telling me that you've looked at operating allowances and you can find a billion dollars.
That's right.
When does the government plan to start the phased petrol‑tax hikes and why now?
I can find that billion dollars. Otherwise that money would be available for either reducing debt faster or spending on other things. And the alternative, of course, uh is that we would be increasing petrol taxes uh significantly on the first of January.
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Chapters
7 chapters
1
Why is the government delaying the planned fuel tax increase?
0:00–0:37
2
How will the $1.4 billion top‑up to the Land Transport Fund be financed?
0:37–1:34
3
What are the Treasury’s long‑term fiscal goals for surplus and debt reduction?
1:34–2:51
4
How does the Finance Minister justify no new borrowing despite the cost?
2:51–3:42
5
When does the government plan to start the phased petrol‑tax hikes and why now?
3:42–4:12
6
Which operating allowances will be used to cover the fuel‑tax funding?
4:12–5:15
7
How will the upcoming pre‑election fiscal update demonstrate fiscal discipline?
5:15–5:54
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