Newly released documents reveal senior managers at the New Zealand Transport Agency were first alerted to plans to provide fuel relief in an email little more than 25 hours before it was announced.
Chief economist at The New Zealand Initiative, Dr Eric Crampton, outlined the email trail in a Newsroom article on Tuesday that shows the agency had less than a day’s notice to cost and begin implementing the changes.
The Government was under increasing pressure to act in March as the price of fuel skyrocketed in response to the conflict in Ukraine.
The first email in that trail was sent under an “urgent’’ headline from an NZTA senior manager in Investment and Finance to a collection of NZTA and Ministry of Transport officials at 2.53pm on Sunday, March 13.
An urgent cabinet paper was due to the minister at 11am the next day, and officials were told to calculate how much it would cost to reverse the increases in Road User Charges and Fuel Excise that had occurred since 2018, assuming normal use volumes.
They were given 20 hours, less any amount of time spent sleeping.
But Transport Minister Michael Wood, who took the Cabinet paper to his colleagues on March 14, told Newsroom on Wednesday that he’d been in discussions with officials for longer than that.
“It was a relatively short period of time, but it was longer than 24 hours,’’ he said.
At 4pm on March 14 the Prime Minister and her deputy, Grant Robertson, announced the immediate 25 cents a litre cut at the petrol pump and indicated RUCs would receive an equivalent discount, but it would take longer to work out how to implement it.
It would be April 6 – more than three weeks later – before officials found a way to apply a 36 percent reduction to RUCs, in conjunction with an honesty declaration to try avoid stockpiling.
Emails released to Crampton outline how difficult officials were finding it to implement the RUC discount.
On March 16, one NZTA official despaired to the Ministry of Transport:
“I’m keen to understand if there was any consideration given as to whether we could achieve the desired outcome through tackling price at the pump. In our comments, you’ll see that we have raised a number of risks and challenges. In particular, I’m concerned about the complexity of the RUC regime and the ease (lack thereof) of implementation. This will result in a heavy administrative burden, both for Waka Kotahi and RUC licence holders. We’re also concerned about the gaming opportunities which may arise, and inequities (eg compared with FED reduction) through other unintended consequences.”
A diesel subsidy at the pump seemed to be the easiest mechanism but by then it was too late as Jacinda Ardern had already announced two days earlier that the savings would be made through RUCs.
“It was a relatively short period of time, but it was longer than 24 hours.” – Transport Minister Michael Wood
Ardern told Newsroom on Wednesday that Cabinet had been thinking about making the changes “for some time’’.
“In order to make decisions we have to have advice from officials then it’s a matter of making the decision and then implementation,’’ she said.
Ardern said making that decision at Cabinet would have required “quite a bit of background work in the first place’’ but it is unclear if that work predated the 3pm email to senior managers the day before.
Wood told Newsroom it was identified early on that RUCs would be more complicated to discount.
“So we were eyes wide open about that and we then set-up that further work, which I know you paid close attention to,’’ Wood said.
“We were responding to a situation that was evolving very quickly in terms of the pressures that people were facing with petrol prices, so I don’t make any apology for the fact the Government responded quickly to that, and I thank officials for really turning it around pretty quickly.’’
Asked by Newsroom if this was good Government policy, not policy on the hoof, Wood said Cabinet had the information needed to make “a good decision’’.