A week ahead of the fuel subsidy ending, a Christchurch mother of four who has just found employment says there’s no point fixing or building new roads if people can’t afford the petrol to drive on them.
The Government’s subsidy, which first came into force in March last year, has meant a cost reduction of $17.25 for an average 60 litre tank of petrol.
Come June 30, that will wrap up, the discount on road user charges is also ending as will half-price public transport for most adults.
Finance Minister Grant Robertson told 1News it was only a temporary measure and pointed out “the revenue from fuel taxes goes directly towards the funding of new roads, improvements and maintenance, public transport, road safety, walking and cycling”.
But Janelle Richardson, a solo mum from Ōtautahi/ Christchurch, said the increased costs will just increase hardship among New Zealand’s most vulnerable. For her, petrol is becoming a privilege.
She gained employment two weeks ago as a social worker and will travel 32km a day, five days a week. She works school hours because the cost of childcare before or after school would make it “not worth working”.
Richardson has already cut back on costs, giving up hobbies such as exercise classes at a YMCA as well as dancing which was $15 per lesson.
She said leisure activities for her children such as swimming are also off the table.
“The cost of food and power has me juggling other bills to keep afloat and with the rise of petrol, it will add even more pressure.
“Unfortunately it is our tamariki in Aotearoa that are wearing the brunt of the cost of living, as our food options are not as healthy due to the cost.”
She said she supports the solution of cutting GST off basic healthy food items and doesn’t buy the Government’s view that it’s a solution too complex to achieve.
“How can it be in the too hard basket for New Zealand, but other countries in the world are managing to do it?
“We are meant to be voting soon and what party is providing solutions to this very obvious crisis? I am getting sick of the band-aid approach – like this fuel discount that lasted for just over a year, but doesn’t provide a long-term solution.”
Another single mother who lives in Auckland, told 1News she is intentionally job-hunting closer to her home in the east of the city.
“In my last job, I was going from Highland Park to Remuera and it was costing me about $100 a week and that was with the petrol discount.
“I was driving 13km each way but it was also the sitting in traffic that used up the extra fuel,” she said.
“I feel sorry for people who have to use the motorway or for those who have big cars that guzzle fuel.”
In 2019 a Tax Working Group recommended not to remove GST from food because of the complexity of implementing the change, the ineffectiveness of the measure for targeting benefits for lower socio-economic households and large compliance costs.
Roberston said the fuel subsidy was a stop-gap to support Kiwis during difficult times and take the hard edges off during a time of high inflation.
It has estimated to have saved New Zealanders close to $2 billion over the last 18 months.
"We have to strike balance as we move forward. It’s not sustainable for us to carry on with the subsidy given other needs for government funding," he said.
He said the Government is continuing to support Kiwis dealing with cost of living pressures.
"Transport is a big cost to households and Budget 2023 included the funding of free public transport fares for children aged 5-12 and half prices fares for under 25s from 1 July.
"The Government is also easing the pressure by providing targeted support that won’t drive up inflation, including cheaper childcare and free prescriptions. On 1 April we also increased support for superannuitants, those receiving the family tax credit, student allowances and main benefit recipients to help ease the cost of living pressures."
NGOs feeling the pinch
The chief executive of Presbyterian Support Northern, Bonnie Robinson, said struggling families will be forced to choose food over fuel.
The organisation helps families through budgeting, social work, food security and other support programmes.
Robinson said it's preparing for increased demand in food banks when the fuel tax cut is removed at the end of June.
"People need fuel to get to their jobs, and for many of those who use our services, when fuel prices go up, food costs are the only thing they can trim."
She said the cost of living sees very little left over after paying the rent, the utilities, doctor, petrol, school uniforms and fees.
"The families we work with are struggling with the rising cost of living, and those struggles worsen or create other problems in their lives.
"Our services are running at full capacity, and need is high.
"At our food bank in Auckland, we are already starting to stock up on the essentials in preparation for a surge in demand."
She said the Mt Roskill foodbank feeds more than 100 families each week and is urging the Government to address the cost of living crisis in more detail.
"Social service providers can provide food and clothing but if we want people to be able to do it themselves, that’s in the hands of the Government.
"What we want when they are looking at those things is that the most vulnerable are taken into account. They [the Government] should be looking to what Australia is doing and asking can we learn from that? - how is it done elsewhere and how can we learn from that?"
Robinson was referring to Australia's move to take GST off certain basic food items, meaning healthy food is more affordable resulting in an overall cheaper grocery bill.
"It’s all about the basics - cheaper groceries should be available no matter what’s going on in the economy."
Poverty becoming political
National's Transport spokesperson, Simeon Brown, says it has made it clear that the Government needs to be providing tax relief to working families to address the cost of living crisis facing Kiwis, meaning they are able to address the cost pressures they are facing on a weekly basis.
"Labour has failed to get inflation under control, meaning that Kiwis are continuing to face increased cost pressures. This is now impacting them with higher interest rates on their mortgages as well. The Government should have provided tax relief in this years budget, however instead they increased spending which will only cause more inflation in the New Zealand economy."
"Labour talks big when it comes to public transport but has failed to ensure that the buses, trains, and ferries run on time. Labour wants to now spend up to $30b on a slow light rail tram in Auckland, however they can’t even make the current public transport system work reliably. Ensuring the public transport system works reliably will be a top priority for National," Brown said.
Fill your tank up early
Earlier this week, AA released advice for New Zealanders on preparing for the price hike.
AA's fuel spokesman Terry Collins has advised people on how to brace for the increase in prices.
"I’d advise people to fill up their tank at least two or three days before the 30th of June to avoid any potential queues," he said.
People can also limit the impact of the higher fuel costs by using alternate modes of transport or looking for discounts.
"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 those 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 nearby prices, Collins said.
"You can also make significant savings by making the most of the numerous fuel discount schemes," he said.
For Richardson, petrol is just another cost that she's afraid might tip the balance.
"Sports and activities have become a privilege instead of a right because some parents can't afford the petrol to get them to and from practices and games.
"I thought gaining employment was going to be the answer to finally getting ahead in life after studying and getting qualified but this is short-lived as the cost of living and an increase in our fuel again has created more hurdles.
"In regards to support, I have very little, I rely on myself to make miracles happen but I'm not sure how much longer or how further I'll be able to cope with being stretched."
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