End of RUC discount to hit New Zealanders hard

The Minister of Finance’s decision to end the transport support package early next year, and with it the road- user charge (RUC) discount, will result in more pain being felt across the economy.

Before Christmas, it was announced that RUC discounts would end as planned on 31 January. The petrol excise cut will continue until the end of March but will be halved from the end of February. Half-price public transport will also end on 31 March, although it will still apply to people with community service cards.

Ia Ara Aotearoa Transporting New Zealand strongly advocated for a continuation of the transport support package to help families and businesses through what threatens to be a very challenging year. We recognise the hole the discounts have left in transport funding and acknowledge that they could not go on forever. However, we thought it pragmatic to extend the entire package until inflation dropped below 6%.

The two-headed hydra of high inflation and rising interest rates are putting a significant strain on businesses and families. With unemployment expected to begin rising during the second half of 2023, things could get tough for a lot of people.

While removing the discount on public transport fares and fuel excise will have an impact, removing the RUC discount is likely to have a considerable effect on households. Almost every item that finds its way into the pantries, cupboards and fridges of New Zealand has, at some stage in its journey, travelled on the back of a vehicle subject to RUC. With road transport businesses operating on extremely tight margins, particularly post-Covid, every additional input cost must be passed on. Removing the discount will therefore impose increased costs on almost everything New Zealanders consume.

Now, I don’t want to be unfair to the government because it did initiate the discounts in the first place and, convinced of the part it was playing in curbing inflation, extended them a couple of times in 2022. However, with the worst effects of the cost-of-living crisis still ahead of us, I’d argue that early 2023 is not the time to remove the discount.

Industry welcomes policy change to help bring in migrant drivers

Transporting New Zealand and other transport sector representatives will be sitting down with MBIE officials in the coming months to thrash out an agreement to provide a residency pathway for migrant truck and bus drivers. Long called for, this policy change by the government should help relieve some of the workforce problems currently experienced by transport companies.

Many transport companies currently have trucks parked up because they can’t find drivers. This situation puts significant stress on a business, is hard on the drivers asked to pick up the slack, and in a macro sense, is a drag on economic productivity and a key contributor to inflation. It has also been well-publicised how much the bus and coach industry has struggled to find drivers, with commuter routes in our major centres cancelled due to the ongoing shortage.

We are glad the government listened to our advocacy on this issue – we have made a real effort to keep Transport and Immigration Minister Michael Wood updated on the extent of the driver-shortage problems in the industry throughout the Covid-19 and post-Covid-19 periods. But while the temporary residency pathway will help, there is still a lot of work the industry needs to do to grow our own sustainable workforce, which is why Transporting New Zealand continues to push the Road to success traineeship to attract new people into our industry.

Ports of Auckland debate going nowhere

Everyone is utterly sick of the ongoing debate about whether to move the Ports of Auckland from its location in Auckland’s CBD. The matter has come up again due to the new mayor of Auckland, Wayne Brown, campaigning to relocate the port. Mainfreight managing director Don Braid stated in the media before Christmas that the issue was “becoming boring” and was “full of posturing and never-ending debate”. I completely agree with him.

Despite several worthy studies into the issue, we are no closer to a resolution now than we were a decade ago, and I’d be surprised if even another decade moves the needle much. The reason is that shifting the port is an incredibly complex proposition that will have numerous consequences across the supply chain. None of this, or even the current location’s advantages and disadvantages, are fully understood, and that’s to say nothing about the suitability of any new site either in Northland or the Firth of Thames.

The freight industry is simply focused on getting on with the job during challenging times. Moving the port may or may not happen one day but for the foreseeable future, the focus remains on servicing the current location as efficiently and safely as possible.