Transport Minister says no guarantee that cost of Auckland fuel tax won't spread

Wednesday, 2 May 2018

Transport Minister Phil Twyford said the Government is increasing monitoring of fuel prices in New Zealand's largest city, but offered Parliament no guarantee that the cost of the Auckland regional fuel tax won't be charged on motorists elsewhere.

Transport Minister Phil Twyford says petrol companies are 'in no doubt' about what will happen if the cost of the Auckland regional fuel tax spreads, but offers no guarantee it will not happen.

From July, petrol retailers are set to have to pay an additional 11.5 cents in excise tax per litre of petrol sold in Auckland, however where the money is actually charged is much more complicated.

In the wake of revelations about BP's pricing tactics, Road Transport Forum chairman Ken Shirley said the tactics showed the folly of regional fuel taxes, predicting the cost of the tax in Auckland would simply be spread elsewhere.

'It is obvious that what will happen come 1 July is that the fuel companies will spread the Regional Fuel Tax out around the country to soften its impact in the Auckland market,' Shirley said.

Dave Bodger, the head of fuel discounter Gull said while he expected all petrol companies to play by the book in terms of gathering information on Auckland fuel sales and paying money to the Government, there is no way to define where the money comes from.

'We've only got one cheque book.'

Petrol companies pay excise tax as a lump sum, but with some areas paying far more than others, it is arguable that certain parts of the country already pay more than their share of excise tax.

Twyford said the Government was making its position clear to the petrol companies and he had seen no sign of action from the former National Government.

'This Government has made its attitude to price spreading very clear to the fuel companies.'

Legislation was being passed to give the Commerce Commission the power to initiate market studies, while Energy Minister Megan Woods has summoned BP to Parliament 'to make it very clear what our attitude is to anti-competitive behaviour,' Twyford said in Parliament.

But asked if he could guarantee that price-spreading would occur, Twyford said, 'no'.

Earlier, Prime Minister Jacinda Ardern said the petrol companies would answer questions about where the costs would fall.

'It is called a regional fuel tax because it is only intended for Auckland,' Ardern said in Parliament.

'It'll be the fuel companies who'll be answering questions if that's used as an excuse to hike prices on New Zealanders it's not intended for.'

On Tuesday Twyford issued a statement saying a new monitoring system would be established to check whether prices in Auckland had risen to cover the regional tax.

'To mitigate the risk of price spreading, I have asked officials to set up a monitoring system when the regional fuel tax comes into effect,' Twyford said.

'Monitoring would help the Government identify any price spreading. Such a monitoring system would also help the public see how petrol prices are being set across the country.'

On Wednesday morning, National leader Simon Bridges said in an interview with Stuff, that areas where there was little competition among the petrol companies were likely to pay much of the added bill.

'I think it's entirely feasible that you'll see Wellingtonians, you'll see South Islanders, pay that regional fuel tax as much, maybe even more, than Aucklanders will.'

Bridges has said National would can the regional fuel tax. However he has not ruled out increasing excise tax generally.