Bryce Edwards: Political Roundup – Labour responds to the “Costpocalypse”, but should it go further?

Bryce Edwards: Political Roundup – Labour responds to the “Costpocalypse”, but should it go further?

The “Costpocalypse” is finally getting serious Government attention. Yesterday’s announcement of cuts to fuel taxes and cheaper public transport was a response to rising electoral pressure on Labour over the “cost of living crisis” – something the Government had until now refused to accept existed. Last week’s shock opinion poll obviously helped focus minds around the Cabinet table.

It’s a smart move. As the Herald’s Thomas Coughlan writes today, the cut to fuel taxes “was the right thing to do, easing short-term pain on struggling households… and it makes sense for the Government to smooth the impact of those price rises by lowering fuel costs. It’s not difficult to do either.”

Something had to give. Pressure from across the political spectrum was proving too much for Jacinda Ardern to keep up the pretence that there was no crisis and therefore no action was required. Crucially, this political pressure reflects a reality that the public, especially those on lower incomes, are really struggling at the moment.

Stuff political editor Luke Malpass sees the Government’s shift as a return to political flexibility: “For Labour, this is a significant move and shows that it might be regaining some of its political agility that has been lost over the past year or so as it has become tied up with Covid and wedded to the righteousness of to its big bang reforms in water, health, climate change, housing and elsewhere.”

Government decision widely welcomed, but more is demanded

There is a consensus today that the Government’s announcement is a step in the right direction but more is needed.

Te Pāti Māori co-leader Debbie Ngarewa-Packer pointed out that there are much bigger problems in terms of food and housing that the Government appears unwilling to address. She complains, “Fuel is the last thing on the list creating real material hardship for our families.”

The Green Party is relatively cold on the fuel tax cuts – not because of climate change, but because they would prefer direct welfare payments. They argue that petrol retailers could also just take the 25 cent per litre cut in taxes for themselves in profits.

Many consider the level of the fuel tax cuts are inadequate and that three months might not be enough, with an extension likely. BusinessDesk’s Ian Llewellyn suggests the 25 cent cut could be bigger, saying “Someone paying $3.20 a litre at the pump on Monday was paying about $1.42 in levies, taxes, GST and carbon prices.”

Blogger Martyn Bradbury urges the Government to go further and make public transport entirely free: “Here’s the reality, Putin is in this for the long haul and the face saving measures Labour have scrambled together will inoculate us for about 2 weeks before more measures are required.”

Bradbury emphasises the need to go beyond transport costs, saying today: “Great. Do Child Poverty, Inequality and Housing next! Isn’t it amazing how fast a Government will move when polls tank? We need this same urgency on a whole raft of issues.”

Leftwing blogger Steven Cowan points out that electricity costs are about to increase for poor people: “at least 40 percent of Kiwi households will see a jump in their power bills as the electricity industry, with the blessing of the government, does away with low-use plans. Those whose power use is very low will be hardest hit. As part of the phasing out, power companies will be able to double the daily fixed rate for low users from 30c a day to 60c a day, which works out to an increase of around $110 over the next year.”

Should public transport fares be permanent cut, or made entirely free?

The cuts to public transport fares have been met with particular enthusiasm. Thomas Coughlan sees this element of the package as the “most politically significant”, and points out it’s occurring despite fares not actually increasing at the moment.

Here’s his explanation for the fare cut: “That detail was a signal to households to consider public transport use to cut energy bills (public transport will now be far, far cheaper in many places than driving), and it was a clear signal that the Government was wedded to its “mode-shift” approach to transport, which seeks to economise road use by shifting people from private vehicles on to bikes and public transport.”

But many feel public transport should be made entirely free, and permanently rather than for three months. Today’s Stuff newspaper editorial says “with our climate change commitments in mind, that should arguably be a permanent change.”

In Auckland it’s set to become a core part of the local government election campaign, with mayoral contenders Leo Molloy and Labour-endorsed Efeso Collins both pushing for this. There is also hope that the Government will deliver something for public transport in the upcoming Budget (which Grant Robertson gave some hints about yesterday).

Currently, the Government is only budgeted to allocate about a tenth of the cost of the petrol tax cut to public transport. While the tax cut will cost about $350m, the fare cut is estimated at around $35m. It wouldn’t cost too much more to make all such transport free, and only cost a tiny fraction of the Government’s climate change budget and roading costs.

How does the drop in fuel taxes work with climate change?

There’s always going to be tension between cost of living problems and climate change. In the case of yesterday’s announcement, there is a major problem, because the Government’s climate change strategy is based on the need for fossil fuels to increase in price significantly. So, was the tax cut a mistake for the environment?

Richard Harman writes today, “The decision to lower the fuel price does raise questions about the Government’s commitment to phasing out our dependence on fossil fuels.” He says this paradox is why the Government also had to cut public transport fares – so that it would be less vulnerable to criticism about their climate change agenda.

Rightwing commentator Matthew Hooton says it’s hypocrisy, as the tax cuts come just as the price of fuel was seeing people talk about not driving as much: “When it comes to it, the polls will always trump the Labour-Green Government’s commitment to Jacinda Ardern’s ‘nuclear-free moment’ and climate change ‘emergency’, and her fake pledge to halve net greenhouse-gas (GHG) emissions by 2030. For anyone who is serious about climate change, the one silver lining of the Russian invasion of Ukraine is the surge in the price of oil”.

So, perhaps the bigger lesson from yesterday’s announcement is that at least in the short term, cost of living politics trumps the climate change agenda.


Further reading on cost of living and fuel taxes

Jason Walls (Newstalk ZB): Ardern finally drops C-bomb in cost-of-living debate
1News: ‘Cataclysmic change’ needed to address decades of poverty
Stuff: Editorial – The politics of petrol – fuel excise cut just the start in wider inflation war
Thomas Coughlan (Herald): Government budges on cost of living, as Jacinda Ardern slashes fuel tax, National and Act urge her to go further
Thomas Coughlan (Herald): Jacinda Ardern admits there’s a cost-of-living crisis, but won’t pivot away from climate agenda (paywalled)
Luke Malpass (Stuff): Petrol prices: Government bows to inevitable but goes big with fuel excise cut
Martyn Bradbury: After denying a cost of living crisis & saying she wouldn’t slash petrol taxes – Jacinda admits there is and does! Great, do Child Poverty & Housing next!
Anneke Smith (RNZ): Opposition parties give government ‘fail’ grade over temporary fuel tax cuts
Richard Harman: Cutting petrol tax raises questions (paywalled)
Steven Cowan: New government measures will not reduce economic hardship for many
Herald: Editorial – Inflation Nation editorial: Pressure goes on as prices hike (paywalled)
Todd Niall (Stuff): The pot of gold at the end of Auckland’s regional fuel tax rainbow
Ian Llewellyn (BusinessDesk): Govt will review the future of petrol tax cuts (paywalled)
David Farrar: Labour cuts a tax!
No Right Turn: Making the costs clear
Andrew Dickens (Newstalk ZB): The PM cannot claim to have any insight into poverty
Rachel Sadler (Newshub): Government’s fuel tax cut doesn’t fix wider cost of living crisis – National, ACT
Matthew Hooton (Patreon): Labour-Green doesn’t really care about climate change(paywalled)
David Hargreaves (Interest): BNZ economists say inflation in excess of 8% is ‘not out of the question’
Michael Neilson (Herald): Fuel tax cuts welcomed by politicians, Government urged to ‘do more’ to ease wider living-cost ‘crisis’
Mana Wikaire-Lewis (Māori TV): Poll-spooked Labour puts more pūtea in pockets in ‘global energy crisis’
Jenna Lynch (Newshub): How much motorists will save after Government’s fuel tax reduction
Jimmy Ellingham (RNZ): Elderly, students going without food to afford rent, petrol
RNZ: Council, AA happy road cost cuts won’t subtract from transport infrastructure investments
Rahul Bhattarai (Herald): Fuel price crisis: What can Government do to try to push prices down?
RNZ: Public transport fares to be halved, fuel taxes and road user charges reduced
Henry Cooke (Stuff): How fuel taxes actually work, how they have gone up in recent years, and how they are being cut


Other items of interest and importance today

Chris Trotter (Daily Blog): A Fork in the road: Which way should Labour go?
Responding to the latest shock poll for Labour, Chris Trotter says that Labour should embrace radicalism as well as a close working relationship with Te Pāti Māori and the Greens.

Verity Johnson (Stuff): Why I am thinking of ditching Labour
A former Government supporter feels very disappointed by how the Government has dealt with non-Covid issues over the last few years.

Michael Johnston (Stuff): Teaching children to participate in the contest of ideas
An educationalist argues “the importance of teaching students how, rather than what, to think” particularly when it comes to contentious areas of politics, history and current affairs.

Martyn Bradbury (Waatea News): Why Labour are slumping?
Labour needs to go back to leftwing basics to beat National, according to Martyn Bradbury.

Shane Jones (Herald): Beware – Treaty co-governance is contagious (paywalled)
The former New Zealand First Cabinet Minister argues against the Three Waters reforms and other areas of constitutional change involving co-governance, saying the “public does not recall giving the Labour Party permission to impose its Treaty of Waitangi co-governance master plan. A dogma that thrives where visibility is weak, debates are shallow and agendas are murky.”

ODT: Editorial – Turbulent Three Waters for Government
The Otago Daily Times argues the Government’s water reform programme could “become a lightning rod on Māori issues”, and it’s now time to explore some alternatives.

Newshub: The Hui poll: 17 pct of Māori voters planning to switch away from Labour at 2023 election
According to a new opinion poll, “a decent chunk of its Māori voter base planning to walk away from the Labour Party at the next election”

William Hewett (Newshub): The Hui poll: National MP Shane Reti says Māoridom’s love affair with Labour is over
National argue that Labour is losing Māori support over the cost of living crisis.

Michael Neilson (Herald): Government announces new funding for Māori Health Authority to turn around ‘hugely inequitable health outcomes’
An announcement has been made today about the interim Māori Health Authority’s $22m budget for commissioning health services.

Jo Moir (Newsroom): Little’s radical health overhaul in pandemic
An interview with Andrew Little about the upcoming health reforms.

Gavin Ellis: Fundamental flaws in public media plans call for big fixes
Media commentator and scholar Gavin Ellis argues that the Government has got it wrong in the way RNZ and TVNZ are being merged, and he worries about the new organisation’s political independence.

Will Trafford (Māori TV): ‘Tragedy’ if TVNZ destroys RNZ amid mega merger – CEO
RNZ boss Paul Thompson is warning that it will be a “tragedy” if RNZ is taken over in the merger with TVNZ by commercially-minded TV executives. Thompson says the merger is “bittersweet” as his preference for the new entity was for it to be a fully-funded public broadcaster, though it’s still a big step forward.

Barrie Saunders: Broadcasting merger – why and what will it mean?
A former TVNZ company director provides a critique of the Government plan for a merger with RNZ.

Laura Walters (Stuff): The internet is no safer three years on from the Christchurch terror attack
Much Government reform has been implemented in an attempt to make New Zealand safer after the March 15 terrorist attack, but experts say the internet might be becoming even worse.

Graham Adams (The Platform): The ‘Listener’ professors chalk up another win
The Royal Society has dropped its disciplinary action against 2 academics, and Graham Adams argues that they had little choice if it wanted to avoid further embarrassment

Grant Bradley (Herald) Government poised to open door to tourists sooner than planned(paywalled)
The Government is under pressure to reopen the borders, and an announcement has now been brought forward on this to this week.

Isaac Davison (Herald): Five years ago, just three households were in the highest-priority ranking for public housing. Now there are hundreds (paywalled)
The situation for those needing state housing, especially those on the waiting list, is actually worse than it appears.

Rachel Moore (Stuff): Dental difficulties driving people to Waikato Hospital’s emergency department, study shows
A New Zealand Medical Journal study has looked at the high cost of dental care.