Friday, May 18, 2007



What's good in the budget

Having criticised the Budget yesterday for failing to deliver to the poorest New Zealanders (you know, people who actually need the help - unlike the wealthy foreign beneficiaries of the business tax cuts), I think I should point out that there are things I am pleased about. The first, obviously, is the increase in foreign aid. I've blogged about this already, here, but its still worth mentioning again. The government is finally moving towards meeting its commitments, and hopefully the massive show of support for making poverty history will encourage them to move further in the future

Secondly, there's the changes to KiwiSaver. When this was first announced back in 2005, I called it "a solid, social democratic programme", and yesterday's changes make it even more so. The matching of contributions by the government will encourage people to participate while being aimed squarely at the poor (the maximum level is reached at $12.50 an hour - only slightly higher than where the government wants the minimum wage to be in a year - so wealthier New Zealanders don't benefit disproportionately), while the requirement for employer contributions is a solid redistributive measure. Sure, it will have some effect on wage bargaining, but it shouldn't be a large one - particularly as some of it will be offset by tax credits (and in any case, 4% over four years isn't much of a "wage rise").

Finally, there's the new regional fuel tax. Quite apart from making it clear that Aucklanders can pay for their own bloody roads (and giving them the tool to do it), to the extent that raising the price of petrol will discourage vehicle use and encourage vehicle efficiency it will also have an important secondary benefit in fighting climate change. The opposition (and more importantly, the government's support parties) haven't twigged yet, but we've just effectively gotten ourselves a carbon tax, by stealth, at up to triple the rate of the original proposal (the 2002 carbon tax of $15/ton was expected to add 3c/litre to the cost of petrol. This can go up to 10c/litre, or around $50/ton). Add in the cap on roading spending (and therefore push to spend on public transport), and we have some level of direct revenue recycling as well. Sure, it's quick and dirty, and doesn't make the link explicit, but it will work - and that's what's important.

11 comments:

Thre are more aucklanders "per km of road" than "other NZders per km of road".
You might find that non aucklanders arhe the ones who really get burnt when everyone else refuses to pay for the repair of long streches of freeway that connect them to ports health services and so forth.

GNZ

Posted by Anonymous : 5/18/2007 06:26:00 PM

"....Aucklanders can pay for their own bloody roads"

Long term this is going to bite the rest of New Zealand in the bum.

What the government has put in place is a means where ALL local councils can raise petrol taxes.

That means say the proposed Taupo by pass could be funded by a local petrol tax. Putting the burden on local users for a national highway. So instead of a central funding body (where Aucklands road taxes are able to be used for the betterment of all NZders) we will have local funding bodies.

Agree with Anon that this could turn out to be a double edged sword. Where the larger population centres can grow their roading/public transport infastructure by sheer weight of numbers while the good people of say Taupo, will be slugged big time.

People will know that the petrol in Taupo is more expensive and fill up in Turangi or Tokoroa instead. Making raising the
money even harder for the locals (no more comfort stops at the BP Wairakei!).

Setting the boundaries is going to be interesting. Expect a lucrative trade in mini tankers going to the Waikato or Northland to get the cheaper petrol and selling it on the side of the road (or in you driveway).

Which the larger users like trucking companies are in a perfect position to do.

Posted by Gerrit : 5/19/2007 05:08:00 AM

And I guess Wellingtonians can also pay for their own roads - Transmission Gully anyone? That'll be funded out of a nice local petrol tax too.

And I'm sorry, but this won't discourage people from using their cars - particularly in Auckland. Auckland's public transport is crap enough that you could probably double the price of petrol before you'd noticeably change driving habits. I commute from West Auckland to the North Shore every day for work - public transport would cost me about 40% more and take twice as long.

Posted by Anonymous : 5/19/2007 12:50:00 PM

Not if it's done by *regional* councils. NZ regions are pretty big, so it usually isn't going to be worth driving between two of them. (Turangi, Tokoroa and Taupo are all in Waikato - you'd have to make a 100km round trip to Rotovegas for cheap BoP gas if they had any).

Plus Taupo doesn't actually *need* a bypass - there aren't traffic jams in rural NZ even in rush hour.

Posted by Rich : 5/20/2007 01:33:00 PM

Rich,

The Taupo bypass has been on the drawing board for a long time.

Bypass will happen but I can see the national road board saying to the council "you fund it out of a regional petrol tax".

End result is nothing will happen and the needed improvements to easy congestion through the Taupo Foreshore area plus the dangerous SH1 / Taupo-Napier Highway intersection will not get upgraded.

Been in Taupo in summer around the lakefront? Highway gets blocked.

We live in South Auckland and the Waikoto is less then 20 k's. As a regular commutor to Pokeno (to get decent bacon) and Mercer (to get decent cheese) it will be easy to fill up at Pokeno and save the $10 it costs me to fill up there rather then in Auckland. load the boot up with jerry cans and save another $30.

A nice sit outside at the Muddy Farmer pub overlooking the Waikato River drinking a pint of Guiness and having lunch. Makes it a worthwhile trip.

Can see small townships, just outside the Auckland Regional Council Area, really developing.

That is untill the Waikato gets a regional petrol tax.

Posted by Gerrit : 5/21/2007 08:46:00 AM

Sounds as though you all think the regional petrol tax would have the ideal outcome - the extra roads would become unnecessary due to motorists driving less. I think that's brilliant.

Posted by Moz : 5/21/2007 10:36:00 AM

Yes, but will you really.

In reality people either live a hand to mouth existence - in which case they put $20 in every couple of hundred kms, or fill the car at the next gas station when the light comes on.

I can't imagine more than a minority of border dwellers actually being organised to plan a drive from Manukau to Mercer every time they get down to 30km left.

Posted by Rich : 5/21/2007 11:37:00 AM

You are probaly right about those living on the borders travelling out of the region.

Is the tax on Diesel as well and will the major road users,(trucking companies) be excempt?

They are in the strongest position to buy their diesel in regions without a petrol tax.

If diesel is excempt you could see a huge increase in diesel cars (unless road user charges go up for diesel)

Posted by Gerrit : 5/21/2007 12:05:00 PM

Gerrit - my understanding is that the tax will apply to diesel, but that non-road-users of that diesel (e.g. for generators) will be able to claim it back.

Posted by Graeme : 5/21/2007 12:16:00 PM

And I'm sorry, but this won't discourage people from using their cars - particularly in Auckland.

Actually Anon, when petrol was hitting $1.70 a litre last year the commuter traffic was noticeably lighter. I agree that the bus services are rotten, but when you discourage (say) parents from making the school run, it frees up a lot of space on the roads (cf school holidays)

Posted by Pablo : 5/21/2007 01:08:00 PM

Make every motorist pay for transport that benefits a handful, whether it be inefficient roads like Transmission Gully or public transport that around 9% of Auckland commuters could conceivably use.

The oil companies (like last time) will probably average the charge across the country.

Labour finds it too hard to shift to road pricing - which would make a huge difference to congestion and reduce costs in provincial NZ and at off peak times - it prefers a tax that charges the elderly, mothers and the unemployed driving during the day to pay for trains for people in West Auckland to commute to downtown Queen Street. Great stuff!

Posted by libertyscott : 5/24/2007 04:17:00 AM