Govt to pay $50 a week to low-income families unable to afford increased fuel costs

Report from RNZ
People struggling with increased fuel costs will be eligible for an extra $50 a week – if they qualify for the in-work tax credit. Finance Minister Nicola Willis announced the support package at Parliament in Wellington this afternoon.

It will be available from April 7, when 143,000 “low- to middle-income working families with children will get an extra $50 a week in their bank accounts”.

“The boost will also expand eligibility for this payment to about 14,000 additional working families who will receive the tax credit at an abated rate, that is at less than $50.

“The increase will be temporary, lasting for one year or until the price of 91 octane petrol drops below $3 a litre for four consecutive weeks, whichever comes first.

“This initiative will deliver support to working families who are under significant financial pressure without making inflation worse or further driving up government debt.”

She said it would be paid directly, with most people not having to do anything to get it.

It will cost “up to $373 million” and be paid from the Budget 2026 operating allowance.

Nicola Willis said she knows some families won’t consider $50 a week enough to ease the pain.

“But what I would say to them is we are doing what we can do responsibly, protecting you now, but also protecting the economic future that you and your kids are depending on us for… They would not thank me if I did so much spending that inflation went higher, because that would affect them every time they pay for anything. That would lead to price increases more broadly across the economy.”

As for warnings that fuel prices will remain high for at least 100 days, which Labour said came from officials, Willis said the government had received the same advice.

“We have asked our officials to brief the opposition parties about the response to the Iran conflict, which is consistent with our view that this is an event of national significance. And we’ve put aside some partisanship in order to ensure that those briefings can occur.”

Nicola Willis said she did not know “what decisions the US administration, Israel, Iran, the other countries in the Middle East will make over the coming days, weeks, and months”.

“We do not know how long it will be until global supply chains normalise, and so we are looking ahead to forecast a range of scenarios. But it is also a fact that Treasury have advised me that across a broad range of scenarios, they do continue to expect that the New Zealand economy will keep growing…

“There is no question that this is a bad time for the New Zealand economy because of the price increases that New Zealanders are facing and because of the fuel shock that is occurring. We are very conscious of that. What we are announcing today are measures that target those most vulnerable working families who require additional support at this time.”

Nicola Willis said the US-Israel attacks on Iran, ‘Operation Epic Fury’, are “hurting all Kiwis”.

“The longer traffic through the Strait of Hormuz is disrupted, the greater that impact will be on the price of other goods. Diesel is a key cost for most producers of goods and services in our economy.

“However, The government is also conscious that an untargeted response to the conflict could have long-lasting and painful consequences for the New Zealand economy. We saw this in the aftermath of Covid. Excessive spending more than doubled debt and sent inflation soaring and mortgage rates skyrocketing.”

Prime Minister Christopher Luxon said the world is “facing the greatest disruption to fuel supply, I think, in a generation”.

“New Zealand is in a good position with healthy stocks of fuel in the country and more on the way, and the market is operating as normal. But of course, we are actively planning for a scenario where obtaining future supply becomes more difficult,” he said from Parliament.

“Hundreds of thousands of Kiwi jobs and incomes rely on fuel. Our entire economy relies on fuel. A shortage of fuel supply could affect thousands of livelihoods, so that is why we are continuing to ensure that we have sufficient supply, and that must be our first priority.

“At the same time, we are conscious that the increasing price at the pump is eating into household budgets.”

He said it had been a tough few years, with the pandemic, inflation, recession, tariffs and now a fuel crisis.

“Higher fuel prices are a direct result of the conflict in the Middle East, which New Zealand has no part of or control of. But because of those higher prices, many Kiwis are making sacrifices and changes to their household budgets in order to get through this period. Some people are choosing to take public transport instead of driving their car. Others are having to put off other purchases in order to prioritise getting petrol in the car so that they can get their kids to school.

“Good government means looking after your people, and that means two things. One is recognising when government support is required to help people when times are tough. And two is ensuring that we protect New Zealand’s economic future so that our kids and our grandkids have higher incomes and better job opportunities and don’t have to pay for mountains and mountains of government debt.

“So we’re very conscious of bending the debt curve down and making spending decisions that are affordable for taxpayers now and also into the long term.

“It is a hard reality that we cannot alleviate the pressure of rising fuel costs for everyone. And as we have learned from the Covid response, seeking to do so would do more damage to our economy, which has just started growing again.”

Petrol prices in some locations have reached $4 a litre for premium, while diesel is up more than $1 a litre in the past month, Gaspy data shows. About 20 percent of the world’s supply usually transits through the Strait of Hormuz, which Iran has cut off in retaliation over the US-Israel attack.

The Prime Minister said he spoke to Singapore’s prime minister Lawrence Wong overnight about maintaining fuel supplies.

Luxon says the two countries have an informal agreement.

He says it ensures that in a crisis, Singapore will continue fuel and pharmaceutical shipments to New Zealand while New Zealand will provide food to Singapore.

Luxon says New Zealand gets 31 percent of its fuel from Singapore.