PM accepts cost of living crisis, tax relief at pump?

Prime Minister Jacinda Ardern has acknowledged a cost-of-living "crisis" - and indicated the Government will today announce immediate tax relief at the petrol pump.

The Government heads into the last week of the Parliamentary sitting block with growing calls for it to tackle the cost-of-living crisis - and until now a crisis it did not acknowledge exists.

But this morning on her round of media calls Ardern changed her language, following her refusal last week to use the word "crisis".

"Undoubtedly, for many families, there is [a cost of living crisis]. But I think the most important thing is regardless of what anyone's calling it, it's whether or not we accept that there's something that needs to be done," Ardern told RNZ.

She indicated that Cabinet was today considering temporary relief on some of the tax that Kiwi motorists paid for fuel.

"We are looking at additional things we can do to ease the pressure on families. We will look to move very quickly on decisions. Any decisions taken today, we will speak to this afternoon."

With the cost of a litre of petrol soaring past $3, about 70 cents of that is collected by the Government to go to Waka Kotahi/NZ Transport Agency, which uses the money to pay for maintaining roads, building new roads, and subsidising public transport.

The Government is considering measures to alleviate the burden of the cost of living spike on households, but it is not clear what measures it would consider or when they would be implemented.

Ireland recently announced a temporary relaxation of its fuel taxes. New Zealand has recently experimented with relaxing fuel taxes as a source of transport funding. The Government bailed out Waka Kotahi after its fuel tax and road user charge funding took a massive hit as a result of pandemic lockdowns.

National has urged the Government to adjust tax thresholds and scrap the 10c a litre Auckland Regional Fuel tax, while Act wants the Government to return a dividend of about $187 per person gathered by the Emissions Trading Scheme - money the Government has pledged to put into climate-change fighting initiatives in the coming budget.

Act leader David Seymour said that "at a time like this, we should return carbon tax revenue to those struggling with high prices".

"Act knows Kiwis are struggling, not just with a cost-of-living crisis, but a tax crisis too," he said.

Russia's invasion of Ukraine has seen the price of fuel skyrocket to over $3 a litre in some places, and the AA fears it may go even higher, potentially hitting $4 a litre.

So far National has held off calling for other fuel taxes to be cut, and kept to its long-standing criticism of the Auckland Regional Fuel Tax.

On TVNZ this morning, Ardern agreed things were at a critical point for many families. There was a "wicked perfect storm" of a war plus the economic recovery from the pandemic, she said.

On AM she said: "I think regardless, regardless of the title it's given, you can call it a crisis, an emergency, a shock - the point it is we need to do something about it."

Cabinet would be considering today what it could do to ease that pressure, particularly at the petrol pump.

A new relief package on April 1 included an increase in benefits, payments to superannuitants, and the family tax credit. On May 1 the winter energy payment would also come through.

But more was being considered, she said, and the outcome of the decisions would be announced at 4pm today.

"We do want to move quickly," especially because of the incredible increases at the pump that were causing a lot of pain. People could not be expected to change their travel habits in the course of a week which was how fast prices had changed, Ardern said.

Asked about a freeze on the Auckland regional fuel tax, Ardern instead referred to National's proposal to cut the top tax rate for those earning $180,000 or more. "That is not the kind of initiative that we support... cutting taxes for those at those highest incomes."

On the fuel tax, the Government was mindful of the cost of petrol and Cabinet would discuss that today.

Every cent from fuel excise went into things like maintenance and roading options - Cabinet would need to discuss how those gaps would be plugged if changes were made to such a tax.

"We're looking to move very quickly here - we're seeing the same thing that every New Zealander is seeing right now."

Transport Minister Michael Wood took to Twitter last week to say the Government was "considering carefully" what it could do.

"Yes we are considering carefully what we can do, focusing on low-middle income earners who are feeling this pressure," Wood said.

Meanwhile, this week in Parliament will likely see a return of the National Party goading Labour into admitting there is, to use National's phraseology, a "cost-of-living crisis".

Ministers last week declined to use the term "crisis" but did not deny that costs were rising sharply, putting pressure on households.

On Parliament's last sitting day, last Thursday, Finance Minister Grant Robertson said he accepted there were rising pressures on households.

"I accept that there is considerable pressure on family and household budgets at the moment as a result of the inflation that we are seeing. We also know that Māori are overrepresented in lower-income households in New Zealand and that is one of the reasons why we stand proudly by our record of supporting Māori whānau because we have consistently lifted the rates of income support, we have lifted the minimum wage, and we are increasing the family tax credit," Robertson said.

He added that these policies would "provide significant money in the pockets of families," than National's tax cut plan, which he said could deliver as little as "$2.15 per week" to struggling earners.

Data from Stats NZ showed that households are experiencing the highest increase to their costs in at least a decade.

High-expenditure households were hit hardest, with a 5.4 per cent increase in the year to December 2021, Māori were hit next hardest, with costs going up 5.3 per cent in the year.

Beneficiary households saw costs go up 4.8 per cent.