Labour MP defends upping petrol taxes while promising to bring prices down

Labour MP Willie Jackson has defended his Government's willingness to put up petrol taxes, while at the same time promising new legislation to bring the cost of fuel down.

The new Fuel Market Bill aims to introduce more competition into the industry, particularly at the wholesale end. The Government predicts by the end of the year, motorists could be saving up to 30c a litre at the pump.

"There's examples where we've seen even 30 cents a litre difference when a competitor moves into a market," Energy Minister Megan Woods said on Thursday. 

"We know that the South Island has been paying up to and over 30 cents a litre more than North Island counterparts because there simply hasn't been as much competition here."

Currently, taxes on 91 and premium unleaded fuel adds almost 74c to the price per litre - and that's before GST is applied. National applied six excise tax increases in its most recent nine-year stretch in power, usually about 3c each time. The present Labour-NZ First coalition upped it by 3.5c in 2018, the same again in 2019, and will for a third time this year. 

"Who's going to pay for the motorways? How are you going to pay for infrastructure?" Jackson said on The AM Show on Friday.

"The reality is, you know - if you did your research - that we haven't put this up any more than these guys did over nine years. These guys changed petrol prices six times over nine years... We've got to pay for the infrastructure they refused to invest in."

Nationwide, the coalition is yet to increase petrol taxes by as much as National did - but they've only been in power for three years, and are more than halfway there. 

And Aucklanders are paying another 10c on top of that - before GST - thanks to the regional fuel tax, intended to ease the city's notorious gridlock. Auckland Transport says it's being spent on better public transport, improved roads, more cycle and walkways and new roads, where needed. 

National MP Judith Collins says it's being wasted.

"It's basically going to clog up our roads with cycleways all over the place, and Auckland Transport going around annoying everybody."

The former Energy Minister is sceptical the Fuel Market Bill will make a difference to petrol pump prices.

"It's all actually about the Gull effect - the Waitomos, the smaller players - who buy their fuel from the big players and strangely enough can sell it at a lesser price," she said.

"Apparently they don't have lots of people running around selling other things and whatever. One particular big operator said to me, when I said their prices were extraordinarily high, 'because we sell coffee'. I said, 'Well if you can't make money from coffee, you shouldn't be in the business.'" 

She said when she was Energy Minister, petrol prices came down without having to introduce new legislation. This is debatable, however. Figures from the Ministry of Business, Innovation and Employment  show when Collins took on the role in December 2016, the average price of 91 was $2.01; the day she left office, it was $2.03. Between those two dates it got as low as $1.85 and as high as $2.08. 

Regardless of what's behind the current average price of fuel - $2.39 - Jackson says they're going to "give it a go".

"As you heard our wonderful Prime Minister a few months ago say, these big companies have been fleecing - fleecing - the average person in this country. Now, we're going to give it a crack."