With Government transport subsidies set to be removed at the end of June, the New Zealand Automobile Association (AA) has advice on ways people can prepare for fuel price jumps.
The last day of the 25 cents per litre discount on petrol (a discount on the Government’s Fuel Excise Duty), and the equivalent discount on road user charges (RUC), will be June 30. By the time GST is added, reinstating the tax will add nearly 29 cents per litre to petrol prices from July 1 or soon after, the AA explains.
The discounts have provided some financial relief to New Zealanders for more than a year. Initially introduced in March 2022 in response to the fuel price spike caused by Russia’s invasion of Ukraine, they have been extended multiple times since.
The AA has been supportive of the discount as a way to alleviate some cost-of-living pressure, says AA fuel spokesman Terry Collins, adding they had to end at some point.
“Few people will be happy about fuel prices going up, but international oil prices aren’t currently at the highs they were when the tax discount was introduced so the impact will be lower,” he says.
“The fuel tax money that motorists pay goes into maintaining and improving roads, as well as other transport network investment, and we all know our transport network is in dire need of upgrades,” says Collins.
The Government has topped up transport funds via other tax sources over the past year, but fundamentally the discount – which has equated to around $2 billion lost in tax income – isn’t sustainable long-term, he explains.
His first piece of advice for drivers is that they shouldn’t wait until the very last day of the discount to fill up.
“It’s human nature to wait until the last minute, but I’d advise people to fill up their tank at least two or three days before June 30 to avoid any potential queues,” Collins urges.
“Some service stations overseas have been swamped by vehicles when a fuel discount has been coming to an end, causing long queues that spill out onto nearby roads which can create a hazard.
“Also, to avoid the possibility that some petrol stations might sell out if there’s a final rush in your neighbourhood, take advantage of the lower prices a day or two early.”
Once the subsidy comes off, Collins says there are other ways people can limit the impact of higher fuel costs on their household budgets.
“The best way to save on fuel is to use another way of travelling rather than driving if you can, but that obviously only works in some situations.
“For the majority needing to use a car, it’s worth shopping around for fuel. There can be big differences in fuel prices between different petrol stations in the same area. The Gaspy App shows you all your local prices. You can also make significant savings by making the most of the numerous fuel discount schemes.
“People can also cut down on fuel consumption by driving smoothly – your car performs more efficiently when you drive at a steady speed. Having a heavy foot on the accelerator and brake pedals chews through more fuel than you’d think. And make sure all your tyres are at the right pressure.
“Other worthwhile tactics are planning trips to avoid congestion and combining multiple tasks in one outing. Anything that cuts down on engine running time will reduce fuel consumption,” says Collins.
At the same time as fuel prices increase, current public transport subsidies are also set to end, meaning ticket prices will double for adult bus and train users from July 1, says the AA.
The Government announced that prices for children and young people will continue to be discounted, but this is causing implementation issues for some public transport operators, it adds.
“From July 1, children aged five to 12 are meant to join under-fives and ride for free, while tickets should remain at half price for young people aged 13-24 as well as for Community Service Card holders and Total Mobility Users.
The 36% discount on RUC will also be reinstated from July 1.
The AA says that as has been happening throughout the past year, Waka Kotahi NZ Transport Agency says RUC purchases before this date will be investigated if they are significantly different to previous purchase behaviour.
With more than 1.8 million members the AA represents the interests of road users who collectively pay more than $2 billion in taxes annually through fuel excise duty, RUC and GST.
