Barker Rick: Customs and Excise (Motor Spirits) Amendment Bill — Second Reading 
Barker Rick: Customs and Excise (Motor Spirits) Amendment Bill — Second Reading 
[Volume:623;Page:18408] 
Hon RICK BARKER (Minister of Customs) 
: 
 I move  
That the Customs and Excise (Motor Spirits) Amendment Bill be now read a second time 
. This bill contains two amendments to the Customs and Excise Act 1996. The first amendment will increase the level of excise duty paid on petrol by 5c a litre excluding GST. The second amendment provides for the proportion of excise duty or excise-equivalent duty allocated to the National Land Transport Fund to be indexed to inflation. The Consumer Price Index All Groups excluding credit services will be used for this indexation. 
Outside the provisions of the bill but closely associated with the measures undertaken the Government will also by Order in Council make an equivalent increase to the road-user charges payable by diesel vehicles weighing 5 tonnes or less. 
The Investing for Growth strategy announced in December 2003 was designed with a strong focus on improving the governance of transport in Auckland in particular as a significant economic centre and also to fund regional transport funding throughout the country. Good transport systems however cost money and this bill is about ensuring that there is money now and in the future to make improvements to land transport. 
During the progress of this bill through the House motorists have faced significant hikes in pump prices. Political uncertainty in oil-producing parts of the world has pushed up the global price of oil. The Government is sensitive to the extra costs motorists face at times of high oil prices. With this in mind the Government has proposed an amendment to the original bill which is supported by the Finance and Expenditure Committee in its report to this House after considering public submissions on the bill. We need to balance the need for improved transport systems and the need for businesses and family budgets to manage the increase. The amendment will mean that the increases in excise on petrol and excise-equivalent charges cannot be introduced before 1 April 2005 and it allows for increases to be imposed at a later date by Order in Council. The extra money urgently needed for building better national transport systems will come from this increase but the timing of the increase can be at the discretion of the Government. 
The bill also provides for the excise and excise-equivalent duty allocated to the National Land Transport Fund to be indexed to inflation from 1 April 2006. This provision remains unchanged. In the past successive Governments have had to pass new legislation every time increases in the excise tax on petrol were required. At no time was this legislation ever referred to a select committee. The House must be aware that in the case of the Customs and Excise (Motor Spirits) Amendment Bill this is the first time provisions that will increase the price of petrol have been referred to a select committee. The select committee process provides for members of the public to make submissions on legislation being considered. I am pleased to say that 16 submissions were received by the Finance and Expenditure Committee that considered the proposed legislation. 
Some submissions were concerned about the impact of an increase in excise duty and road-user charges and inflation-indexing on consumer spending. Firstly Treasury has calculated that the impact of indexation on inflation will be extremely small. Officials estimate that it will add 0.014 percent to the consumer price index. That is within the margin of error. 
Taking a longer view the benefits of building a better transport system are vast and measurable in terms of strengthening businesses and also at the local level making it easier to move within cities. Together the increases in petrol excise and road-user charges will generate approximately $207 million annually excluding GST. 
I note that a number of the submissions to the select committee objected to the increase in excise because it was claimed that the funds were raised for Auckland. Those claims are wrong. The revenue collected will be distributed according to current population and projected population growth and all around the country regions will be allocated funds for land transport according to population. While Auckland receives 35 percent of the additional funding the remaining 65 percent will be distributed proportionally around the country. This is based on Auckland having around a third of New Zealand’s population. 
This Government is acutely aware of the need for additional investment in land transport nationwide. We believe that the fairest method of allocating funds for land transport is by population-based distribution. 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 an additional $70 million. The Canterbury region gains $252 million. Wellington gains $219 million. Further north Northland will receive $73 million. Auckland will receive $716 million and $900 million from the consolidated account. 
I emphasise to this House and to members of the public that all additional funds will be dedicated to land transport and allocated under the National Land Transport Programme. Submitters to the select committee were well aware of this. The provisions promise to improve land transport systems roads and local networks. 
We all know that after many years of neglect by National our land transport was near breaking point and becoming unworkable. This was impacting not only on the personal lives of many but also on the economic social and environmental life of our nation. Companies complained that their domestic freight was stuck in traffic as the roads were clogged. People running businesses were sitting in traffic. That is bad for productivity and this Government is determined to turn this round to keep New Zealand competitive. 
The bill is designed to provide a more secure funding base for improvements to land transport. Only with a dedicated revenue stream indexed to inflation can we all be confident that our land transport will receive the ongoing improvements it will need. We are a growing and vibrant country and land transport is a vital infrastructure that must never again be deprived of investment. This legislation ensures that investment funds will be available now and into the future. It shows a far-sighted approach to our country’s land transport that we have not seen before. The Government is committed to investing a massive $18 billion in land transport over the next 10 years to rebuild the country’s neglected infrastructure. The provisions of the bill are part of a wider package of growth and innovation measures that the Government is undertaking to support business and to build a strong competitive nation.