AA wants staged return of tax to avoid panic at pump

Photo: RNZ
Photo: RNZ
The Automobile Association says it favours a staged approach to reintroducing a fuel tax to avoid panic at petrol stations. 

Any day now the Government is due to make a decision on whether to extend or curtail the fuel discount that is part of its cost of living relief package. 

In March this year, it cut petrol tax by 25 cents a litre and road user charges by the same. Public transport fares were slashed in half.

The discount was supposed to last three months, but was extended into January next year, as inflation remains stubbornly high. 

Finance Minister Grant Robertson said he would decide by Christmas what to do next.

AA's fuel spokesperson Terry Collins said a lot would depend on what was happening worldwide, while the Government would be concerned that adding the fuel tax back on would add to inflationary pressures.

When the Government acted in March, the price of petrol had reached around $3.15 a litre. But over winter, a weaker New Zealand dollar was apparent at the same time as fuel prices "started to go through the roof".

Prices had since stabilised at around $2.30 to $2.50 for 91 - which was "a pretty good level", Collins said.

If the tax went back on, motorists could expect to pay around $2.60 a litre at the pump.

Collins believed the tax should be added incrementally, by 5 cents to 10 cents at a time monthly, so big queues of motorists did not cause petrol stations to run dry as they tried to fill up.

"Instead of thinking about a timeframe focus, think about a price frame focus."

This could be done with the fuel excise duty, but not the road user charges.

If the Government took the gradual approach it would stop massive queues at the pump.

"We don't think it's a good idea if it comes on in one hit."

As the Government weighed its options, Collins said AA was worried about the shortfall in road maintenance funding.

"Mind you, we need the money because we spend it on maintaining and improving our roads.  And without the money going towards the fund, we have to find other ways of funding it [the work on the roads]."

The AA took the view the money that was being lost for road maintenance had coincided with one of New Zealand's worst winters, he said.

Its members were concerned about potholes and the workmanship of the repairs.

"They just don't think the repairs have been good enough. Also, we're lagging behind on those safety improvements like median strips that will stop those head-on collisions.

"We're really keen on getting that maintenance done, repairs done and those improvements that will make our roads safer."