Prime Minister Christopher Luxon has again poured cold water on calls for further relief on diesel, despite mounting pressure at the pump as the fuel's price continues to climb faster than petrol.
Speaking in Wellington today, Luxon said while the Government understood the strain high diesel costs are placing on key industries, broad-based relief would be "unaffordable and irresponsible" and risk fuelling further inflation.
"Diesel is the lifeblood of our economy," Luxon said, pointing to its central role in farming, construction and freight.
But he argued global forces were largely behind the steep increases, with diesel prices rising far more sharply than petrol and jet fuel due to strong worldwide demand and ongoing disruptions at refineries that predominantly produce diesel.
According to the user-generated fuel price tracking app, Gaspy, unleaded 91 octane petrol had an average cost of $3.48 a litre while diesel had an average of $3.76 a litre.
The Prime Minister acknowledged diesel users wanted urgent support but warned against repeating what he described as the mistakes of the pandemic era.
"New Zealand learned the lessons from Covid the hard way," Luxon said.
"Short-term gains from spending decisions made during the pandemic resulted in long-term pain — high inflation, high interest rates, high debt and a prolonged recession."
Luxon said the economy was only just beginning to recover when fresh global conflicts put renewed pressure on fuel markets, and that poorly targeted relief now could entrench inflation and delay recovery.
Instead, the Government is sticking with what it calls targeted, temporary support. Luxon highlighted an extra $50 a week for low and middle-income working families, with payments beginning today for those eligible.
"Any support we provide has to be balanced against the need to minimise the impact of global conflicts on inflation and protect our economy in the long term," he said.
Asked about the impact on businesses, Luxon acknowledged many firms and households were doing it tough but said the Government could not "do everything for everyone".
"We’re acknowledging upfront — we can't alleviate the pressure for everybody," he said.
"We do have a framework around timely, targeted, temporary support, which I think most New Zealanders would understand and appreciate.
"They also appreciate and understand that we have a job to do, to protect their long-term interest in that of the economy, too."
Three-month pause to petrol excises, RUCs would cost $500m - Willis
Finance Minister Nicola Willis echoed that message yesterday, pushing back on claims that diesel users are unfairly treated compared to petrol motorists.
Willis said both petrol and diesel users already contribute equally to funding roads — petrol users through fuel excise at the pump, and diesel users via road user charges.
"It's not something that diesel users are expected to contribute more to, nor would we expect them to," she said.
Willis also rejected suggestions of a temporary pause in either petrol tax or road user charges, saying even short-term relief would come at a steep cost.
"The challenge with any temporary pause is what happens when you have to put it back on again," she said.
"It's an extremely expensive measure. Even just for three months would cost around half a billion dollars, and we know it's a very difficult thing to ever put back on."
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