Auckland fuel tax: AA puts fuel companies on notice ahead of tax’s removal

The Automobile Association says it will be watching closely to make sure fuel companies pass on savings to customers once they are no longer collecting the Auckland regional fuel tax.

Fuel prices in the region are expected to drop by 11.5c on Monday, as the fuel tax expires.

The government passed legislation in March to abolish the tax, which was implemented on 1 July 2018, and meant to be in place for 10 years to raise money for infrastructure in Auckland.

AA principal policy adviser Terry Collins says a report by the Commerce Commission about oil companies being slow to lower their prices was as a warning to the industry.

“What the Commerce Commission did then was seen a shot across the bars of the oil companies with the regional fuel tax ending to say, ‘Hey, we expect those prices to come down like a rocket. You know the date it’s happening and we expect to see the full 11.5c reduction on all fuels… both petrol and diesel.”

When the report was released, commissioner Bryan Chapple said the findings “suggest that petrol prices shoot up at the pump in response to increased costs, but there is a noticeable lag in retail prices being lowered in response to decreases in underlying costs”.

As of last September, the regional fuel tax had raised about $780 million.

Consumer NZ chief executive Jon Duffy said the fuel tax will make a difference, but overall it was a small part of how fuel prices were determined.

“We’d really encourage consumers to continue to shop around and use apps like Gaspy to try and find the best deal.

“Just because this tax is no longer on the price of fuel doesn’t mean that all the other factors that go into fuel pricing, you know, still exist.”

Duffy said Aucklanders who could hold off fuelling until Monday should do so, to save that extra 11.5c per litre.

Auckland Mayor Wayne Brown in February said scrapping the tax would make it harder to fund desperately needed transport infrastructure, if it was not replaced with other funding.

Prime Minister Christopher Luxon said he acknowledged Auckland was facing huge infrastructure challenges, “but this fuel tax has actually not been used to deliver them – instead it’s been delivered more cycle lanes, red light cameras, and speed humps”.

He promoted the tax’s cancellation as helping Aucklanders with the cost of living. A few weeks after the announcement, Transport Minister Simeon Brown announced plans to hike nationwide petrol tax by 20c over the coming years, including a 12c hike in 2027, plus an increase to the price of vehicle registration.

Luxon on Sunday said despite getting rid of the fuel tax, the governmentwas “delivering a record investment in transport, including in Auckland”.

“Nearly $4 billion has been set aside to fix and prevent potholes on the state highway and local road network over the next three years – including $478 million set aside for local road pothole prevention in Auckland, a 74 per cent increase over the previous three-year period.

“And funding for public transport services nationally is also set to rise by 41 per cent compared to the previous three years.”

The AA’s Collins said in the coming weeks, savings from the fuel tax may disappear as oil prices recover.