Heather du Plessis-Allan: Government should avoid starting fight over petrol prices

Heather du Plessis-Allan,
Publish Date
Tuesday, 20 August 2019, 4:38PM
The Government could easily be accused of 'fleecing' if they pick this fight. (Photo / File)

Let’s talk about petrol prices.

We’ve had a report out today that confirms what many of us probably have suspected for a while, which is that we’re paying too much for petrol.

The Commerce Commission today put out a draft report saying 'yup, looks like that’s the case'. The report says that it's because the petrol market is not as competitive as it could be.

Nothing's going to be done yet, though We’ve still got  a way to go before the government makes any recommendations that lead to potentially cheaper petrol

But I wouldn't go there if I was this government.

The reason? Tax.

Normally in a situation like this, when a government fights corporates for potentially cheaper prices, it’s a sure win. If we pay less, we love it, we thank the government.

But it’s hard to belie the government telling us we’re being ‘fleeced’, when half the petrol price is tax.

This is a problem probably every government would face, but it’s even worse for this government. That’s because it so publicly put up petrol prices in the biggest city in this country with a nearly 12 cents a litre levy.

And, since the PM told us we’re being fleeced, it’s added more tax with a 3.5 per cent increase in the petrol tax this year.

So, it’s hard to believe, isn’t it?

If we’re really being fleeced, then surely a government that really felt that would alleviate the pain and drop away some of that tax.

Now the government can go ahead and fight this battle if it wants, because you never know, it could maybe win and consumers could be grateful. But it’s a high risk one.

Because (a) this will take years - will this government be there to take the credit if petrol prices come down? And (b) it wouldn’t take much for argument to swing against the government.

It wouldn’t take lot of effort for the petrol companies or the opposition to turn that ‘fleecing’ narrative onto the government itself.

We saw that start today when Simon Bridges called the pm the fleecer in chief. Now, Bridges doesn’t get a lot of cut through so I wouldn't’ be too worried about him, but if that takes a hold, and it can with this government, it’ll hurt.

So if this government was smart it would either drop some petrol tax to show it practices what it preaches, or, just weigh up the political risk and leave this fight alone. Don’t be surprised if that’s what happens.

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