Labour is committing not to raise the fuel excise duty for a full term, should it enter government.
By Giles Dexter of RNZ
The party is also calling on the coalition to cancel a planned increase set to kick in next year, a decision the Finance Minister says is all but confirmed.
The fuel excise duty is due to rise by 12 cents a litre from January, followed by a 6 cents per litre rise in 2028, and 4 cents per litre in subsequent years.
Throughout the year, the Government has expressed reluctance to go ahead with the planned increase in January, within the climate of the fuel crisis.
Cabinet is set to make a decision on whether or not to cancel the planned increase soon, with an answer to a Written Parliamentary Question revealing a decision is needed by August 31 in order to inform the Pre-election Economic and Fiscal Update.
Labour leader Chris Hipkins has previously called on the Government to cancel the planned increase, but on Thursday said Labour would not bring in any increases either.
"New Zealanders simply cannot afford an extra 22 cents a litre on their fuel bills every time they fill up the car, and yet as of today, that is still the Government's policy," he said.
Funding options range from fuel tax hikes to borrowing as election-year scrutiny hits transport priorities. This story was originally broadcast in February 2026. (Source: 1News)
"We will not be increasing fuel tax in the next term."
Fuel taxes are set at a flat rate per litre, meaning they do not go up or down as the price of fuel does. Fuel excise duty has fallen in real terms by 21% since the last increase in 2020.
The revenue from those taxes goes into the National Land Transport Fund, which pays for building, maintaining, and upgrading the roading network.
The Government’s been advised it would need to hike the petrol tax by 21 cents a litre next year to level the playing field. (Source: 1News)
Labour has already committed to using money from the National Land Transport Fund (around 1%) to pay for its promised public transport fare caps, meaning Labour would reduce the money going into the fund while adding a new promise onto it.
Hipkins said Labour would "scale" investments under the National Land Transport Fund, noting the Government Policy Statement for the next three years has not been set.
"We have to scale our ambition in terms of what new roads we want to build and so on to fit within the budget that's available."
He would not single out any projects in particular.
Finance Minister Nicola Willis would not confirm the Government was set to make a decision on cancelling the January increase on Monday, but said it was not going to happen.
"We will not be increasing fuel tax on the first of January next year. We just need to formalise that decision and reflect it in the government accounts," she said.
But, in terms of cancelling increases for the entire term, Willis said Hipkins would have to be up-front on which transport projects it would scale.
"If he's saying to every community in the country there will be less funding for your council to repair the roads, he needs to be straight with them about how many jobs will be lost, how many businesses will be destroyed, what a shudder that will put through our construction industry."
The Transport Minister said Labour was being "irresponsible" by ruling out the increases for an entire term. Chris Bishop questioned whether it was in the spirit of bipartisanship.
"There are roading projects underway right now that are needed, that the communities are backing, that are literally in construction right now, and so this is a significant issue for the Labour Party, and it's irresponsible."
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