![]() This targeting would likely have significantly lowered the cost of providing fuel price relief.ĭespite officials’ preference for cheaper, more targeted measures, the scattershot policy is well liked by New Zealanders. Officials noted that if the Winter Energy Grant eligibility criteria were used, the start date could have been brought forward and or the rate increased, and relief could have been provided “relatively rapidly”. Support through the welfare or transfer system came out as the option which fit “most of the criteria and likely best addresses the problem.” It scored one. In the decision-making matrix used, the Ministers’ option achieved a zero score, meaning the benefits were cancelled by the drawbacks the counterfactual/do nothing option also achieved a score of zero. In the report, Officials weighed three policy options against one another: do nothing/the status quo (the counterfactual) the temporary reduction to road tax and other levies which was pursued (Ministers’ preference) and targeted support through the welfare system (Ministry’s preference). Prime Minister Chris Hipkin’s office directed the Herald’s questions about the official advice to Minister Wood.Īsked why the scheme has not been targeted as officials recommended, Wood said “the Government is focused on supporting all New Zealanders through the global cost of living pressure they are facing…extending these measures was something we could do quickly and would also reach the many New Zealanders on low to middle incomes who need the support the most.” To the degree that the tax reductions are starving the fund, the Government has agreed to make up the difference. The bulk of the cost of the fuel tax cuts is foregone revenue, but that money has a specific purpose: it is hypothecated to the National Land Transport Fund. The balance was redirected from the CRRF after its closure. The Government redirected the first $350m it needed for the fuel tax reductions from the fund before it was closed in April, 2022 (when the Government decided the Covid response could be paid for within the standard Budget process). ![]() Controversially, more than $1.3b of the money has come from underspends from programmes originally funded through the Government’s Covid-19 Recovery and Response Fund (CRRF). The programme will cost some $2b through June 2023, the point at which it is currently scheduled to expire. That decision, however, was reversed by then newly minted Prime Minister Chris Hipkins at the end of January, despite falling petrol prices and the steeply mounting cost of the programme. The advice helped to inform the Government decision - taken in December 2022 - to phase out the fuel subsidy in early 2023. In late November, the report was provided to the Cabinet’s Economic Development Committee which included Chris Hipkins, now Prime Minister, as well as Transport Minister Michael Wood and committee chair Finance Minister, Grant Robertson. The system for delivering the Winter Energy Grant was identified as a good vehicle for delivering relatively fast cost relief to these households. In their retrospective assessment, officials found that Government support supplied through the welfare or transfers system (outside the transport portfolio) would have been best suited to addressing the identified problem: the hardship created for low-income households by sudden fuel price increases. The assessment was not generated before the policy was decided, the usual course taken, because of the extreme haste in which the Government hatched its cost-of-living relief measures in early 2022 officials had a bare 24 hours to provide advice on the fuel tax reduction plan. The advice was produced by the Ministry of Transport in late 2022 some eight months after the Government first introduced the temporary plan to alleviate high fuel prices ( it has now been extended four times). Video / NZ HeraldĪ report by officials on the Government’s now year-long programme of reduced fuel tax and road user charges has found that a more targeted, lower-cost option would have been preferable to help New Zealanders most squeezed by spiking fuel costs. ![]() How West Auckland residents are faring after terrifying shooting, how many of us want dental care to be free and warnings as 200 US banks at risk in the latest New Zealand Herald headlines.
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