'Flabbergasted': Road freight lobby criticises fuel excise deferral

The road freight industry has expressed concern that the continued deferral of fuel excise duty increases will exacerbate infrastructure issues in the country. The fuel excise duty is scheduled to rise by 12 cents per litre in January 2027, followed by smaller increases in subsequent years. However, Labour has committed to not raising the fuel excise duty for an entire term if elected. The industry argues that if the government continues to postpone these increases, it will only deepen the country's financial challenges.

The fuel excise duty, currently set at a flat rate per litre around 70c, has fallen by 21 percent in real terms since the last increase in 2020, while construction costs have risen. The money collected from the fuel tax goes into the National Land Transport Fund, which is used for building, maintaining, and upgrading the road network. The road freight industry argues that without adequate investment in the road network, delays and maintenance costs will increase, ultimately leading to higher costs for consumers.

Labour has stated it will not increase the fuel excise duty in its upcoming term, citing a potential cost of around $1.8 billion over three years if the planned increases are deferred. However, this estimate does not include the planned increases in 2028 and 2029. The party also intends to take $65 million annually from the fund to fund its proposed public transport cap.

Labour's leader, Chris Hipkins, has signalled a scaling of transport infrastructure spending to address the reduced revenue, but has not specified which projects will be prioritized, as the government's policy statement for the next three years has not been finalized.

This stance marks a significant shift from the previous election cycle, where National had campaigned on not increasing petrol taxes during its first term, while Labour had planned for gradual increases through mid-2026. The previous government had also reduced the fuel excise by 25 cents per litre in response to the 2022 war in Ukraine, but this measure was later extended and ultimately ended in July 2023.

In recent weeks, the finance minister, Nicola Willis, confirmed that the government will not increase fuel tax in January, reiterating that this decision is aligned with National's position. The final decision will be made and announced at a later date.