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RNZ News
an hour ago
- RNZ News
Treasury briefing points finger at government spending during Covid-19 pandemic
The Treasury briefing said the Covid-19 response showed the challenges of using fiscal policy to respond to shocks and cycles. Photo: FANATIC STUDIO / SCIENCE PHOTO L The previous government spent too much during the Covid-19 pandemic, despite warnings from officials, according to a briefing released by the Treasury. The Treasury's 2025 Long Term Insights Briefing said debt had risen in recent decades, partly because responses to adverse shocks were not met by savings between those shocks. The higher debt meant less capacity to respond to future shocks, like natural hazards, weather-related risks and biosecurity risks. Treasury estimated the total cost of the pandemic was $66 billion over the 2020-26 financial years and about 20.4 percent of GDP. The IMF and OECD estimated it was among the largest Covid-19 responses globally. The agency releases a briefing every three years, with this one looking at the role of fiscal policy through shocks and business cycles. The briefing said the Covid-19 response showed the challenges of using fiscal policy to respond to shocks and cycles. Initially, Treasury recommended "strong fiscal stimulus" at the start of the pandemic, which was cited as "perhaps" causing the economy to be much stronger than expected by the end of 2020. The wage-subsidy scheme in particular was seen as making an important contribution to the strong initial recovery, limiting the increase in the unemployment rate and enabling economic activity to resume when restrictions relaxed. Treasury then moved away from recommending broad-based stimulus, preferring more targeted and moderate support. Its post-election advice to the then-Finance Minister in late 2020 highlighted "the importance of controlling ongoing spending and ensuring it was high value to meet the medium-term fiscal challenge." By August 2021, with the Delta lockdowns coming in, Treasury recommended any decisions to provide support to businesses "should take account of macroeconomic trade-offs". It recommended against any further stimulus from Budget 2022 onwards. Wage subsidies and similar schemes during lockdowns made up about 35 percent of the costs of the response. A further 18 percent came from health-system costs, like vaccination, contact tracing, and managed isolation and quarantine. The remaining "nearly half" was made up of a wide range of initiatives that Treasury said had "varied objectives". Some were aimed at directly responding to the impacts of Covid-19, others were aimed at providing fiscal stimulus or "achieving social or environmental objectives". They included "tax changes, training schemes, housing construction, shovel-ready infrastructure projects, increases to welfare benefits, the Small Business Cashflow Scheme, Jobs for Nature, additional public housing places and school lunches". Programmes within the fiscal response that were not tied to the shock were seen as having "a lagged impact on the economy and proved difficult to unwind in later years". The report suggested cyclical management was best left to monetary policy, run by an independent central bank. It also suggested governments set out clearly when fiscal policy will be used ahead of time, including pre-defining responses. Ideally, this would have cross-party agreement. An independent fiscal institution, which could scrutinise and report on the sustainability of fiscal policy, was also suggested. The previous government had considered setting up a watchdog to cost election policies, but it could not get cross-party support. National then changed its tune, with current Finance Minister Nicola Willis supporting such a measure, but New Zealand First and ACT were opposed to the idea. Willis jumped on the report's release, saying Treasury's language was "spare and polite", but its conclusions were "damning". She said the briefing showed the challenges of using "big spending measures" to respond to one-off shocks. Willis singled out the briefing's focus on the money spent on initiatives not directly tied to the Covid-19 response. "That is a very diplomatic way of saying New Zealanders are still paying the price of the previous government extending a big-spending approach, initially intended for a pandemic response," she said. RNZ has approached Labour for comment. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
3 hours ago
- RNZ News
Review ordered into product labels
The government has officially labelled product labels a problem and ordered a review. It said we currently have 30 codes, standards and regulations, and that is too many, with the current requirements costly, frustrating, complex and outdated. Commerce and Consumer Affairs Minister Scott Simpson spoke to Lisa Owen. To embed this content on your own webpage, cut and paste the following: See terms of use.
RNZ News
3 hours ago
- RNZ News
What we know so far about the new road user charges and the end of petrol tax
The government proposes to phase out petrol taxes in favour of electronic road user charges by 2027. Photo: RNZ / Marika Khabazi Explainer - The government made it official this week that the petrol tax is on the way out, to be replaced by electronic road user charges, or RUCs, for everyone. Drivers of all light vehicles - petrol, hybrid, diesel and electric - will now pay for road use based on distance travelled and vehicle weight, instead of an extra charge at the pump. Right now, Road User Charges (RUC) only apply to vehicles not powered wholly by petrol, and all vehicles weighing more than 3.5 tonnes. An awful lot of the specifics around the new system remain uncertain, as the government considers how to implement the plan. But here's what we know so far. All of Aotearoa's 3.5 million light vehicle owners will need to pay RUC fees to help pay for road upkeep and maintenance. But exactly how the fees will be set and collected are still a work in progress. In making the announcement, Transportation Minister Chris Bishop said it was "the biggest change to how we fund our roading network in 50 years". It comes as more and more drivers use hybrids, electric vehicles or other technology. Bishop said the number of fuel-efficient petrol hybrid vehicles has jumped from 12,000 in 2015 to 350,000 today. "As our vehicle fleet changes, so too must the way we fund our roads. It isn't fair to have Kiwis who drive less and who can't afford a fuel-efficient car paying more than people who can afford one and drive more often." "This is a change that simply has to happen. The government has recognised reality and is getting on with the transition." Replacing fuel excise taxes with electronic road user charging was part of National and ACT's coalition agreement. The government's been signalling this move for some time and last year scrapped an Auckland regional fuel tax of 11.5 cents per litre . AA principal policy adviser Terry Collins said while the association thinks the changes are good in principle, "we need to see the detail". Transportation Minister Chris Bishop. Photo: RNZ / Samuel Rillstone That's one of the big question marks right now. Under the system, all vehicles would be paying for road use based on distance and their vehicle's weight, Bishop said, but no detail on the weight limits was given. The current RUC for light vehicles - under 3500kg - are $76 per 1000km. The average Toyota Corolla weighs between 1200-1500kg. Charges can widely vary for larger vehicles under the current RUC, according to NTZA's website . There's also an administration fee of $12-$13 per transaction. No costs or parameters for the new system have been announced, but just as an example under the current RUC setup, a small electric vehicle would pay more than $760 including fees for 10,000km worth of credits. Photo: RNZ / Dan Cook Again, answer unclear. Bishop said currently, petrol drivers pay a tax of about 70 cents per litre. However, the AA says that the full cost of fuel excise, duties and taxes such as GST altogether was over $1.20 per litre as of mid-2024 . There's no real way of knowing yet if the changes would automatically drop 70 cents or more from fuel prices. Legislative work toward the changes will begin next year, with the government eyeing 2027 for the new system to take place. "At this stage, no date has been set for the full transition of the light vehicle fleet," Bishop said. "That's a deliberate choice, as we're focused on getting the system right rather than rushing its rollout." The legislative plans include: "The changes will support a more user-friendly, technology-enabled RUC system, with multiple retail options available for motorists," Bishop said in announcing the changes. "Eventually, paying for RUC should be like paying a power bill online, or a Netflix subscription. Simple and easy." Bishop told ThreeNews that users could possibly pay road RUCs through an app, and log in and pay what they owed at the end of each month. The next step for the plan is changes to the Road User Charges Act 2012, and a bill will be introduced to Parliament and referred to a Select Committee for public input. "I expect to pass legislation in 2026, followed by an updated Code of Practice for RUC providers," Bishop said. "We will also engage with the market in 2026 to assess technological solutions and delivery timelines. In parallel, NZTA and Police will upgrade their systems to support enforcement in a digital environment." An example of a current road user charges permit. Photo: RNZ Bishop called the current setup for light vehicles a "clunky" system. You keep track of your odometer readings, pay for RUC in 1000km chunks and put a sticker on your windscreen that shows how many km they are good for. Once your odometer passes the number you've paid for in RUC, you need to pay for more. "We're not going to shift millions of drivers from a simple system at the pump to queues at retailers," Bishop said. "So, instead of expanding a clunky government system, we will reform the rules to allow the market to deliver innovative, user-friendly services for drivers." The AA's Martin Glynn told Morning Report that it's not the easiest system for users. "The biggest problem with it, people need to keep an eye on their odometers and see if they've used up their RUC and need to buy more. That's probably the biggest problem with it." However, the government said it wants to shift away from the "outdated" system and replace it with greater use of electronic RUC, or eRUCs. Basically, instead of having to keep track of your odometer readings and paying as you go for km credits, it's a device that does that work automatically. There are a variety in place now for current requirements. There are several approved eRUC providers for the heavy vehicle fleet of vehicles over 3.5 tonnes. "EROAD's system automatically records the distance each vehicle travels on-road and accurately records all off-road travel with its intuitive GPS-tracking capability," the website of one of the providers, EROAD, states. Infrastructure New Zealand chief executive Nick Leggett applauded the change and said it could work well with other transport charges. "User-charging is a fair, proven way to fund infrastructure. eRUC will make it easier to apply that principle consistently across all vehicles, whether petrol, diesel, electric or hybrid, and as our transport system evolves. "We also see the use of flexible payment methods and the integration of eRUC with other transport charges such as tolling and congestion pricing as sensible moves." However, there's still a lot of questions around the costs of implementing eRUCs for everyone. Would all cars be fitted with new devices or would some kind of self-monitoring system be in place for those with older vehicles? There's also been a fair bit of talk doing the rounds on social media about the idea of electronic records on vehicle travel and worries about the government tracking people. In a statement to RNZ, Bishop said there were privacy protections in place and it would remain a concern in developing the new systems. "The Road User Charges Act 2012 has existing provisions that protect privacy by limiting what RUC electronic information the RUC collector can access. "Location data can only be accessed to verify where the driver is owed a refund for off-road use. "Officials will be engaging with the market and stakeholders (including the Office of the Privacy Commissioner) on the features of potential solutions, such as cost, privacy and ease of use." The AA's Collins said it would be important to see the detail of "who has that information and what's done with it". "Everybody in the trucking industry wants to have that technology fitted. I don't think that's the case in the light fleet." Collins noted that our phones - which almost everyone has with them in their cars - are also packed with tracking technology. Other countries have managed similar systems, he said, but "it's what the data will ultimately be used for in the future that's the biggest concern". In their announcement, the government also said that private firms will take over the collection and administration of charges from NZTA, "to foster fairer competition". Tax Justice Aotearoa said they were concerned about that change and taking the responsibility away from the government. "We are deeply concerned by this initiative as using the power of the state to require citizens to pay charges decided by the state is a core function of government," Chair of Tax Justice Aotearoa Glenn Barclay said in a statement. "It should not be for the profit of anyone and it means that the details of thousands of road users will be held and managed by private organisations with no accountability back to the public." "Putting RUC in the hands of private companies, who will need to make a profit on the transactions, is a recipe for higher fees for drivers," the Public Service Association union's national secretary Fleur Fitzsimons said. All vehicles will now have to pay RUCs. Photo: RNZ / Nicky Park It's unclear. Petrol could in theory be cheaper, but will be somewhat offset by RUCs all vehicle owners must pay. "This is a once-in-a-generation change," Bishop said. "It's the right thing to do, it's the fair thing to do, and it will future proof how we fund our roads for decades to come." Collins said the distance-based changes could benefit certain drivers, such as those who own multiple vehicles that aren't actually travelling much, or boat users. "Nothing's going to be cheaper, we know that," he said. "It's like saying do you think that your cars are going to be cheaper in three years' time?" "Realistically, we want to be building a modern safe roading network and that's not cheap. All of us as road users need to contribute to that." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
