Labour is signalling it would at least explore stronger intervention in response to the fuel crisis, potentially following Australia’s lead, if it were in government, though key differences between the two countries complicate any direct comparison.
Rather than committing to concrete policy, Labour leader Chris Hipkins said on Wednesday he would first seek official advice on measures already implemented overseas.
Hipkins suggested support could be considered for diesel users, foodbanks, and the most vulnerable households, alongside longer-term measures aimed at preventing more families from falling into hardship.
However, he stopped short of presenting these ideas as firm election commitments.
“We don’t have access to that advice right at the moment, but were we in government, that is the sort of advice that we would be asking for,” he said.
Australia’s interventionist approach
Australia’s Labour government has adopted far more aggressive measures in response to the crisis than New Zealand has so far. However, those decisions reflect significantly different starting conditions, including more severe supply disruptions and a stronger economic position that allows for broader intervention.
Australia has already moved to the second stage of its four-tier fuel contingency plan. Since late March, hundreds of service stations have reportedly run out of at least one type of fuel each day, while at least six shipments have been delayed or cancelled.
In response, the federal government has drawn down its emergency reserves, releasing approximately five days’ worth of diesel.
At the state level, Western Australia has taken additional steps by securing a 4 million litre diesel reserve. Even so, the state’s opposition leader has warned that supply would last only six hours under sustained demand.
Tax relief has also been deployed. Fuel excise has been cut in half for three months—reducing costs by 26.3 cents per litre—while state governments have contributed a further 5.7-cent reduction. While this provides immediate relief and helps dampen inflation, it also reduces incentives for consumers to limit fuel usage.
Australia has also eliminated Road-User Charges (RUCs) for heavy vehicles for three months.
New Zealand’s more restrained response
In New Zealand, diesel vehicles, electric vehicles (EVs), and hybrids are all charged road user charges (RUCs) based on how far they travel and how heavy they are. Petrol vehicles work a bit differently — their tax is built into the price at the pump through fuel excise, while diesel isn’t taxed that way.
Diesel has usually been cheaper than petrol, so the system felt fair. But with the recent fuel crisis, that’s flipped — diesel prices have now climbed higher than petrol.
Electric vehicles were exempt for a number of years to encourage people to adopt them. More recently, they were included in the RUC system so that all road users contribute to transport funding.
The government has also indicated it eventually wants to replace petrol excise altogether with a universal RUC system, although that change is expected to take time.
Finance Minister Nicola Willis has ruled out cutting fuel excise taxes or introducing broad exemptions or reductions to road user charges (RUCs). She said these options don’t meet the government’s criteria for support during the crisis — that measures must be targeted, timely, and temporary.
Those principles were shaped by lessons learned from reviews of the Covid-19 response.
She said those kinds of measures would probably end up helping higher-income earners more than others.
However, the government does seem likely to follow South Australia’s lead by allowing heavy vehicles to carry larger loads.
After consulting with the public and industry on possible interventions, the Ministry of Regulation is now considering what regulatory changes it could make. Luxon confirmed this would include “common-sense things like allowing heavy vehicles to carry heavier loads.”