AA ADVICE: How the transport support package affects you
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The war in Ukraine is having a noticeable impact on everyday living costs for Kiwis. The cost of fuel has skyrocketed, making it more expensive to fill our cars, as well as increasing the cost of other goods and services.
The Government has released a package designed to support Kiwis through the current global energy crisis. How will this impact total costs?
Running costs have increased in 2022
The latest AA Running Cost Reports are now out, quantifying all the costs of car ownership. Businesses use these reports to give them up-to-date information about costs, but they’re also a helpful way to measure the change in running costs over time.
The running costs for petrol and diesel passenger vehicles have risen: up 9 per cent on average for petrol vehicles and 4 per cent for diesel vehicles. The larger the vehicle, the more the running costs have risen, because the main cause of the increase is the higher price of fuel.
The only type of vehicle that costs less to run in 2022 than last year is a battery electric vehicle (BEV), down 15.3 per cent. This was caused by a fall in the price of BEVs. Petrol hybrid vehicle running costs are up 2 per cent.
These two types of vehicles tend to have lower running costs than petrol or diesel vehicles, and the gap has widened as fuel prices have risen. The total lifetime cost of ownership is lower for electric cars than petrol cars, according to research by GenLess.
How the transport support package will help
There are three ways the transport support package will help Kiwis.
The cost of fuel has been cut by 25 cents a litre for three months. This will last from 1 April to 30 June and has been achieved by cutting fuel excise duty. When you add in the reduction in GST due to the lower price, this makes the saving around 29 cents per litre. This makes it around $11 cheaper to fill a 40-litre tank, around $14 cheaper to fill a 50-litre tank, and around $17 cheaper to fill a 60-litre tank.
Road user charges have been cut by 36 per cent for three months. Between 21 April and 21 July, diesel vehicles paying road user charges get a cut equivalent to the cut in the fuel excise duty.
Core public transport services are half price for three months. From 1 April to 30 June, all regional buses, ferries and train trips will be charged at 50 per cent of normal rates.
The Government has said it may extend one or all these measures beyond the three month period, and the lower fuel excise tax won’t take funds from infrastructure development.
The outlook for running costs
Unfortunately, it’s likely running costs will continue to rise this year. Even if the war in Ukraine ends soon and the package is extended, other factors are also pushing up prices: high inflation, ongoing supply chain problems and rising interest rates, for example. Cars with higher carbon emissions will be more severely impacted as the full clean car “feebate” system comes into place; BEVs will be less impacted by rising fuel prices.