By extending the fuel excise duty cut, the Government is encouraging people to drive more, which will only worsen the climate challenges we face in the very near future
Opinion: By most accounts, the storms that have been wreaking havoc in Auckland and Northland are fuelled by climate change. The warnings have been coming for years. We are on the precipice of a climate emergency, which makes Prime Minister Chris Hipkins' decision to extend the road user charge (RUC) and petrol tax cuts so bewildering.
Images from around Auckland paint a terrifying picture. Roads flooded and washed away, slips burying homes and trains derailed. Sadly, it's just a taste of what is likely to come ever more frequently.
Climate change and the intense storms it brings are fuelled by a warming planet. The planet is warmed as the layer for atmospheric greenhouse gases becomes more concentrated. Exploring, extracting, refining, distributing, and burning fossil fuels, particularly with New Zealand's fleet of nearly five million cars, is a massive source of greenhouse emissions.
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When things get cheaper, people tend to consume more. Grocery stores move a lot of food before it spoils by selling it at a discount. Airlines fill empty seats on aeroplanes by lowering airfares. People drive more when petrol costs less. By reducing the cost of fuel, the Government is encouraging people to drive more.
The effect on driving from the first tax cut, which was only set to last five months, was estimated to be a 1-2 percent increase in driving. That small increase in car travel was expected to increase vehicle emissions by up to 99,000 tonnes. Since then, the reductions have been extended to 12 months (and potentially beyond). This only continues to encourage more driving and more climate-changing emissions.
The road user charge and petrol tax provide a significant portion of the funds needed to maintain the road network. The extent of damage to roads in the aftermath of the extreme rainfall last week appears to be substantial. It will require millions, if not billions, of dollars to restore local roads and state highways. The tax cuts have so far cost an estimated $1.5 billion – mostly money that would have gone to offset the repair bill we now face. We are taking money from roads at a time when we need it the most.
The beneficiaries of the RUC are not low-income families but people with high wealth. People in higher income brackets spend more on fuel and reap far more tax savings than lower-income households.
It's not just the climate that suffers with more driving. An increase in the number of cars on the road means that buses are more frequently stuck in traffic. People who use public transport are disadvantaged and pushed towards using a car as buses are late or cancelled. Greater traffic congestion also means a lot more fuel is burned as cars sit idling in queues.
More cars on the road also mean more crashes. Last year was one of the highest road deaths in the past decade, with 377 fatalities.
The tax cuts probably are not doing what some of the Government communications around them say they are doing. As the tax cuts rolled out, the Government warned petrol companies to pass the tax savings on to consumers. Within months, those companies were recording record profits. While it's not clear whether some of that profit came from pocketing a portion of the tax cut, selling more litres of fuel did more for the petrol business's bottom lines than it did for individual consumers.
An argument has been made that the RUC and fuel tax charges are helping families make ends meet. Certainly, to a degree, reducing the out-of-pocket cost of fuel means there are a few more dollars in the bank for some families. However, the beneficiaries of the RUC are not low-income families but people with high wealth. Household income is a very good indicator of the number of vehicles owned, annual kilometres driven, and total fuel consumed. People in higher income brackets spend more on fuel and reap far more tax savings than lower-income households.
The storms, flooding and misery over the past week should be a wake-up call. Encouraging more driving with cheaper fuel will only worsen the climate challenges we face in the very near future. We need to reduce our reliance on cars and shore up the transportation budget. For the good of everyone, let the RUC and petrol tax cuts expire.
