Cam Slater: They’ve Painted Themselves into a Corner

Faced with a perfect storm of falling poll numbers, rising and rampant inflation and poor, reactive decisions of their own making, the Labour Government has been forced to roll over fuel excise and road user charge cuts yet again. They’ve painted themselves into a corner on fuel prices, and the hilarious thing is they’ve used their own paint and brush while doing it.

The latest Taxpayers’ Union/Curia poll shows that the Government has lost traction. The Roy Morgan poll has had a run of seven months showing the Government will lose the next election, and later today the latest inflation figures will show the Government has failed to get that under control.

They’ve been forced into rolling over the excise and RUC cuts, again, exactly as I predicted months ago.

The government has announced the cut to the fuel excise will be extended until January 2023.

Finance Minister Grant Robertson said half-price public transport fares and the extension to the Road User Charges cut would also continue until January 31, 2023.

The initial cut was brought in to reduce cost of living pressures on households, in March 2022.

“We are doing this because we want Kiwis to have some certainty for the rest of the year in the face of volatile fuel prices and ongoing cost of living pressure,” Robertson said.

“We can afford to do this.”

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No, they are doing it because they know inflation is out of control, and jacking up fuel taxes again will see a further nasty drop in the polls. They can’t afford to do it fiscally, and they can’t afford to increase them again politically.

If it goes on much longer, there will be calls for excise and RUC to remain permanently down.

The government produced Treasury modelling to suggest that it will reduce inflation by 0.5 per cent in the June 2022 quarter.

The extension, which was widely expected given elevated global oil prices, will mean that while petrol prices largely remain in the $3 to $3.50 per litre range, they will not go another 25c higher.

Without the extension, the government estimated that a 40 litre tank of petrol would cost an extra $11.

Robertson attributed the cut to public transport costs as boosting patronage on buses and trains in major cities, from 49 per cent of 2019 levels to 65 per cent.

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Reducing inflation by 0.5 per cent is pathetic. Even with the fuel discount it still takes a mortgage to fill your Mini for the week.

“This is a targeted intervention where we can get to one of the root causes of the cost of living pressures New Zealanders are facing.

“Having done this, we’ve actually helped keep inflation under control … We know we are targetting directly here one of the drivers of inflation.”

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Good to see Robertson finally admitting that high taxes are inflationary.

But polling must be hurting like hell, and a hideous inflation rate due out later today is what has really pushed Robertson into taking the podium on a Sunday afternoon.

It is a really strange time for an announcement. Perhaps they are trying to cheer Kiwis up after the All Blacks loss?

And, come January, what are they going to do when inflation is still high?

In January, households really struggle: credit cards maxed out because of Christmas, summer holiday expenses, school expenses… The public won’t allow them to lift the fuel discount. Worse still for this Government, the public also won’t be thanking them for it either.

It really is a case of having painted themselves into a corner, and it will be nigh on impossible to extricate themselves from the predicament in election year.

Cam Slater is a New Zealand-based blogger, best known for his role in Dirty Politics and publishing the Whale Oil Beef Hooked blog, which operated from 2005 until it closed in 2019. This article was first published HERE