Budget 2022, Emissions Reduction Plan: What action on skyrocketing fuel prices, public transport, congestion charging could Kiwis see?

The Government's gearing up for one of the most important days on the political calendar - the annual budget, when Kiwis learn the state of New Zealand's finances and how ministers will be spending billions of dollars over the coming years. 

Ahead of that, the Government will also be releasing its Emissions Reduction Plan (ERP) on Monday, outlining how New Zealand will reduce its emissions on its way to reaching net-zero carbon emissions by 2050.

The Budget Policy Statement released in December made it clear that climate and health would be the two core focuses of this month's Budget. 

But Kiwis are also battling cost of living issues, like rising fuel prices. While the Government slashed fuel excise tax and halved public transport fares in the face of global inflation, petrol prices are creeping back to where they were in March and surpassing $3 in some places.

So what more could the Government do to combat that and the rising cost of living? 

Transport Minister Michael Wood was tight-lipped this week, but mentioned the Budget isn't far away.

"We have taken a pretty major step with the 25 cent reduction in [fuel excise duty] and the 36 percent reduction in [road user charges] and the half-priced public transport. That's a pretty strong response at this stage," he told Newshub.

"Obviously, we have the Budget next week and we will be considering what further we could do in terms of some of those broader costs of living pressures, but that will be for next week."

Finance Minister Grant Robertson said the Government's actions so far to keep fuel prices down have been "welcomed by motorists".

"Clearly, while the war in Ukraine carries on, it is going to be putting further pressure on those oil prices. What we have said is we will continue to monitor that and make our decisions accordingly," he said.

Aucklanders have to pay an additional 10 cents per litre (plus GST) on their fuel due to the regional fuel tax. National's called for it to be scrapped to help Kiwis feeling pain at the pump, but Wood said it's important means of funding critical transport infrastructure.

"As is always the case with tax, it's one thing to say, we will cut tax in a certain area, but there is a consequence to that. Overwhelmingly, Aucklanders support us getting on with the job of building a better transport system, in particular, public transport. That is why that funding is there. That is why we won't just jump in and remove it."

The Budget will be delivered next week.
The Budget will be delivered next week. Photo credit: Getty Images.

Public transport and congestion charging

It's no secret having a functional public transport system will be critical to getting Kiwis out of their cars and cutting emissions. 

Public transport featured heavily in a list of strategies and policies released last year as part of the Government's consultation ahead of the ERP. 

It included "reducing public transport fares", which the Government did earlier this year with its halving of fares for three months. Since then, patronage has increased significantly. 

Asked at the post-Cabinet press conference on Monday whether the Government may keep the low fares at next week's Budget, Robertson said he wouldn't make be making any Budget announcements yet.

"But what we did say at the time that we put out that policy was that it was a temporary policy to support people through this period with the inflation spike," he said. "We continue to review that and review the impact on people, but it was never designed as a permanent policy. It was done in line with the inflation increase."

A Newshub-Reid Research poll this week found 66.9 percent of respondents supported making the policy permanent

Also on the list of ideas consulted on ahead of next week's emissions plan was congestion pricing. That's where motorists are billed for using roads at certain times and locations in the hope it will motivate them to use other modes of transport, cutting down traffic and emissions.

On Thursday morning, during a pre-Budget speech, Robertson was asked about progress on Let's Get Wellington Moving, the plan to improve transport in the capital. He said the Crown was committed to its contribution and the two councils signed up to it were working through their funding processes. But they needed "tools".

"One of the really important things that we can do though is make sure the tools are available to the councils to be able to do what we are asking of them," he said.

"Certainly on Monday, in the Emissions Reduction Plan, you will hear a bit more about the kinds of tools that we think can be available and the contribution that we are looking for councils to be able to make."

Robertson later told media that a lot of work has been done on congestion charging, including under the previous government and by a select committee last year which gave cross-party support.

"The really important thing though to note is that bringing a system like that in requires a lot of things to happen first. Not only do we need good quality public transport to alleviate some of the issues that would be caused by congestion charging, but we need the systems in place and the work with local authorities.

"On Monday, we have the Emissions Reduction Plan, obviously congestion charging was part of the draft of that and so when it comes time for the final plan, you will be able to see it."

On the issue of congestion charging, Wood earlier this week said: "We will just wait to the ERP to confirm where we are going there".

If it was implemented in Auckland, it's possible that could be the end of the regional fuel tax as we know it, he suggested.

"If we do move forward with a scheme for Auckland we'll consider those things, but I think it's probably fairly widely accepted that it would be a significant impost to have both of those schemes in place at the same time so we'd certainly take that into consideration," Wood said.

The Helen Clark Foundation and WSP in New Zealand expects the Government to announce it will introduce congestion charging as part of the final ERP plan. 

A report from the two groups this week found congestion charging in Auckland's central business district wouldn't have a negative impact on low-income communities, but a lack of public transport options made it more difficult to implement outside of the CBD. Due to a lack of modelling and analysis, the outcomes for Wellington were less clear.