8 October 2018
Another week, another review by this Labour-NZ First government. The latest was announced at the post-Cabinet press conference today when the Prime Minister proclaimed that kiwis are being “fleeced” at the petrol pumps. The solution she claims is rushing through legislation – amendments to the Commerce Act – allowing the Commerce Commission to investigate the margins on fuel. The pump price this week hit a record high of $2.48 per litre for 91 Octane in some parts of the country. It’s the importers the PM blames for this “fleecing”, completely ignoring the fact that more than half of what we pay at the pumps is tax to fill the government coffers. Glasshouses come to mind – as in people in glasshouses shouldn’t through stones.
I’m no apologist for the oil companies, but the government too could be doing something to relieve the price pressure on New Zealanders by reducing the tax component of fuel. The low NZ dollar is also a contributing factor. Fuel prices are not just as simple as the cost of importing oil.
When I say more than half the price of petrol is tax that doesn’t include the Government’s increase in excise (which kicked in a week ago) or her 10c per litre regional fuel tax for Aucklanders. The AA keeps a watching brief on the cost of petrol and diesel in NZ and has a very good analysis of the breakdown of our fuel costs. According to the AA website:
“The price you pay for a litre of petrol is made up of the imported cost of the petrol, taxes (fuel excise, ETS and GST), shipping costs and an importer margin (the amount the fuel companies earn to offset their operating costs, plus profit margin). Currently just over a quarter of the pump price is the actual cost of refined petrol while about 50% is tax (not including the 10c Auckland Regional Fuel tax)”
National Party leader Simon Bridges quite rightly pointed out in response to today’s announcement “The importer margin, the profit petrol companies make on every litre of fuel sold and which the Prime Minister wants more information on, is 31 cents per litre and around the same as it was last year. The amount the Government makes is $1.25 – and that keeps increasing,”
So, another review or inquiry, but to what end? Are we likely to see petrol price fixing? If so, that would be a real intervention throw back to the era of Rob Muldoon’s carless days. Interventionist policies are not what New Zealand needs.
If fairness and equity are what the Prime Minister is trying to achieve she should also include an inquiry into why boaties continue to pay a road user charge on their petrol and diesel, while electric vehicle owners – who do actually use the roads – don’t.