The road freight industry says the country will be digging itself a deeper hole if governments continue to put off or cancel increases to fuel excise.Labour has committed not to increase the fuel excise duty for an entire term, if elected.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.The government's position is that it is "unlikely" the fuel excise duty will be increased in January, with a decision set to be announced soon. National's view is that the increase should be delayed.The fuel excise duty is set at a flat rate per litre (currently around 70c), meaning as inflation or the cost of petrol rises or falls, the excise duty stays the same.In real terms, it means the fuel excise duty had fallen by 21 percent since the last increase in 2020, while at the same time construction costs had increased.The money collected from the fuel tax went into the National Land Transport Fund, which paid for the building, maintenance, and upgrading of the roading network.Ia Ara Aotearoa Transporting New Zealand, the national association for road freight, said roading repair and maintenance could only keep pace with a growing economy if there was investment in it, and if freight became more costly or difficult to move around, it would show up in the cost of living.Transporting NZ chief executive Dom Kalasih.RNZ / Phil PenningtonChief executive Dom Kalasih said he was "flabbergasted" by the proposition of increases being put off even more, saying continuing to put the increase off would be a "threat" to economic development."We'll be digging ourselves a deeper hole. I think it's already well recognised there is a significant gap between the revenue collected from petrol excise duty and from road user charges, and what needs to be spent on the infrastructure," he said."Unless the government, whatever colour or brand it is, has got some other cunning plan to introduce some revenue, then we are going to get increasing risk of transport problems, and that will likely have an adverse effect on our economic prosperity."Labour has long said it would not go ahead with the January increase, but on Thursday Labour leader Chris Hipkins said the taxes would not be increased at all next term.The Treasury's advice in the Budget Economic and Fiscal Update said each six-month deferral of the planned increase from January 2027 had a cost of around $300 million, meaning Labour's three-year deferral could cost around $1.8 billion.The forecasts, however, only took into account the deferral of the 12c increase in January, not the planned 6c increase in 2028, and subsequent 4c increases, none of which Labour would go ahead with.The party also wants to take $65m a year out of the fund to pay for its promised public transport cap.Hipkins has signalled a "scaling" of transport infrastructure spending to deal with the reduced revenue, but he would not give a view of which projects could be scaled, noting the Government Policy Statement (GPS) for the next three years had not been set.Labour leader Chris Hipkins.RNZ / Baz MacdonaldThe GPS had been delayed until after the election, with Hipkins saying there was "no fixed plan" for the next three years."When it is set, it will have to scale to within the budget that's available," he said.It marked a reversal from the 2023 election, in which National campaigned on not increasing petrol taxes in its first term, while Labour had planned for gradual increases through to mid-2026.The previous government had also reduced the fuel excise by 25 cents a litre in response to the war in Ukraine 2022. That was then extended, before ending in July 2023.Earlier this year, the government opted not to cut fuel excise duty in response to the current fuel crisis, after Treasury warned it would be poorly targeted and provide limited relief.On Thursday, the finance minister Nicola Willis said the government "will not be increasing fuel tax" in January, which a spokesperson later clarified was National's position, and the final decision would be made and announced in due course.ACT leader David Seymour.RNZ / Nathan McKinnonACT leader David Seymour said the matter had gone to Cabinet Committee earlier in the week, and was being considered."Cabinet is yet to make a final decision, and I tend to think government decisions are best announced after Cabinet has made them," Seymour said.New Zealand First deputy leader Shane Jones said Labour was being desperate."They need to accept that there are inexorable pressures. If we are to continue to modernise and meet the expectations of Kiwis in relation to infrastructure development, I think all fair-minded Kiwis realise that we have to contribute from time to time if we're going to maintain and expand the capacity of our infrastructure."The government's plan is to eventually do away with fuel taxes altogether, and move the full vehicle fleet to road user charges (RUC).Legislation to amend the RUC system to enable the transition of light vehicles from fuel excise duty to RUC is currently going through Parliament.No date had been set for the transition, however, with the transport minister previously saying it was more important to get the system right than rush the rollout.
'Flabbergasted': Road freight lobby criticises fuel excise deferral
The road freight industry says the country will be digging itself a deeper hole if governments continue to put off or cancel increases to fuel excise.








