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Scrap oil and gas ban, adjust taxes further – Luxon

NZ Herald,
Publish Date
Wed, 16 Mar 2022, 2:49pm

Scrap oil and gas ban, adjust taxes further – Luxon

NZ Herald,
Publish Date
Wed, 16 Mar 2022, 2:49pm

Christopher Luxon has reaffirmed National's policy of overturning the ban on issuing new permits for offshore oil and gas exploration, saying it is a solution to New Zealand's energy crisis. He also suggested his big tax cut policy could change by the time of the next election. 

The Government is currently grappling with the high cost of fossil fuels, driven by Russia's invasion of Ukraine. While it is motorists and businesses who are currently most exposed to high transport costs, other fossil fuels like coal, which New Zealand burns for electricity, have also spiked. 

Luxon said gas could be used as a bridging fuel, and said the Government should scrap its 2018 decision to stop issuing permits for oil and gas exploration offshore. 

"The loss of gas is a big problem for New Zealand at the moment," Luxon said. 

"We're bringing in at least two boatloads of Indonesian coal in each and every week to fire power stations," he said. 

"When you talk about a transition, in the economy, gas was a really good product for us. It's not the perfect solution, you've got to think about how you do these things in a really staged and smart way. Right now, gas would be a really good fuel for the economy". 

Luxon said there should be a "proper transition" to greener energy. 

"You'll wean yourself off oil, wean yourself off gas ultimately, but in the intervening period, we're going to need gas for some time," Luxon said. 

The Government this week said it would cut public transport fares by half, and indicated cheaper public transport could become permanent thanks to funding from the forthcoming Budget. 

Luxon said public transport had to stand on its own merits. central Government will give about $2.6 billion worth of subsidies to public transport over the next three years. Local government complements this with further subsidies and fares. 

Luxon described this week's decision to slash fares as a "small subsidy". 

"This is a pretty small scale subsidy, it's $25m over three months - but ultimately to me public transport has to stand on its own, and if it doesn't it turns into a subsidised white elephant," Luxon said. 

"We're open to better and smarter public transport options, but it depends on each individual project and how it stands on its own merits," he said. 

Luxon has promised to lift tax brackets, giving people an effective tax cut by adjusting tax thresholds to take into account inflation since 2017. 

He has challenged Grant Robertson to implement those cuts in the 2022 Budget, when they would cost $1.7b. 

Luxon is in no position to implement the cuts in 2022, however, given he is not currently in government. The earliest he could implement them would be in 2024, following a victory in the 2023 election. 

If Luxon wants to adjust the brackets back to 2017 levels in the 2024 budget, he would likely have to adjust them even more than currently planned to take account of the next two years' inflation. 

Luxon said he would say whether the thresholds he implements in the 2024 budget would be the same ones as said Robertson should implement in the 2022 Budget. 

"We'll work that out then - what I'm telling you is as a broad principle, is it's about a principle called fairness. How can you sit there and say you're not going to inflation adjust taxation thresholds," Luxon said. 

Luxon said the policy would not be contentious, and he supported continually adjusting thresholds to take account of inflation. 

"The tax thresholds are set, and they get locked in time … what we're saying is let's make sure real incomes are back to 2017 levels which helps people navigate the inflation they're dealing with right now," Luxon said. 

"So we're saying 'yes, on an ongoing basis, going forward, we would find a way to do inflation-adjusted taxation thresholds,'" he said. 

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