Barker Rick: Customs and Excise (Motor Spirits) Amendment Bill — First Reading 
Barker Rick: Customs and Excise (Motor Spirits) Amendment Bill — First Reading 
[Volume:621;Page:16610] 
Hon RICK BARKER (Minister of Customs) 
: 
 I move  
That the Customs and Excise (Motor Spirits) Amendment Bill be now read a first time. 
 At the appropriate time I will move that the bill be referred to the Finance and Expenditure Committee and that the committee present its final report on or before 16 December 2004. To allow for this I will move at the appropriate time that the committee have authority to meet to examine the bill at any time while the House is sitting except during questions for oral answer during any evening on a day on which there has been a sitting of the House and to meet on a Friday in a week where there has been a sitting of the House notwithstanding Standing Orders 191 and 194(1)(b) and (c). 
This bill is important because it provides a more secure funding base for the improvements in land transport that are part of the Government’s Investing for Growth strategy announced in December 2003. That strategy was designed to improve the governance of transport in Auckland and significantly boost regional land transport funding throughout the country. Good transport systems however cost money and this bill is about ensuring there is money now and in the future to make improvements to land transport. 
The bill contains two amendments to the Customs and Excise Act. The first amendment increases the amount of duty to be paid on petrol by 5c a litre excluding GST. This bill provides for this increase to come into effect on 1 April next year. However the Government will promote an amendment to this bill to provide for an increase in the petrol tax to be brought into effect by Order in Council on a date no earlier than 1 April 2005. This allows the Government to determine the appropriate time to apply the increase taking into account the international price of oil. The second amendment indexes to inflation the portion of fuel excise duty used to fund land transport. Indexation will be annual and will be implemented from 1 April 2006. At expected average rates of inflation each annual increase will be approximately half a cent per litre. 
Outside the scope of this bill the Government will also move to make an equivalent increase to road-user charges payable for diesel vehicles weighing 5 tonnes or less. This increase will also be brought into effect by Order in Council on a date no earlier than 1 April 2005. Together the increases in petrol excise and road-user charges will generate approximately $207 million annually exclusive of GST. All the additional funds will be dedicated to land transport allocated under the National Land Transport Programme and distributed around the country according to population. On the basis of population $1.3 billion will be distributed over the next 10 years to areas outside Auckland. This means for example that my part of the country—Hawke’s Bay—will gain approximately $70 million for road transport. The Nelson-Marlborough-Tasman area will receive $66 million extra and in the far north Northland will receive an extra $73 million for road transport. Auckland because of its population will receive $716 million and will also receive a special grant of $900 million from the consolidated account making Auckland’s total funding for land transport for the next decade $1.62 billion. 
This funding is part of a massive Government commitment over the next 10 years to land transport nationwide—a commitment worth more than $18 billion in total. This commitment is by far the largest that any Government has made to land transport for some considerable time. As we all know it is sorely needed as this Government works to rebuild the country’s worn-down infrastructure. 
The bill also provides a mechanism for collecting those funds to ensure that the result of decades of underfunding of land transport will be addressed. In the past successive Governments have had to pass new legislation every time increases in excise tax on petrol were required. Increases to the excise duty on petrol were needed just to maintain the levels of transport initiatives. That is not only because it costs more and more to undertake land transport initiatives but also because new technologies make vehicles more fuel-efficient. While I salute fuel efficiency it also means that we gather less excise revenue per vehicle per kilometre. 
This bill provides for the rates of duty on motor spirits to be amended by Order in Council. Any new rate must be calculated in accordance with a specified formula. This formula indexes existing rates of duty in accordance with the consumer price index excluding credit services and by reference to the amount of duty required to be diverted to the National Land Transport Fund. So it is carefully targeted and the increased funding resulting from indexation will be used only for the specific programme for which it was intended. By doing this the bill puts transport on a more secure funding base than has previously existed. 
As I conclude I would like to quote the National Party leader: “There is no doubt that our roads are under huge pressure.” and “The real solution to Auckland’s traffic congestion lies in building more roads and doing so without delay.” So I say to the National Party leader: “Watch this space.” We are setting up the mechanisms to achieve that and more. Of course his party does not like the way we are going about it but I say that people sitting in cars and waiting at bus stops want solutions. This Government is delivering them. This Government has identified transport as a key element in achieving the economic social and environmental outcomes that are desired for New Zealand in the 21st century. Our vision for transport is that by 2010 this country will have an affordable integrated safe responsive and sustainable transport system. There is still some way to go before we achieve our vision but this bill today is one of the essential building blocks delivering some of the funding required to make our vision a reality. I commend this bill to the House.