Commentators are split on whether the fuel support package announced by the Government on Tuesday is generous – or leaving out some of the most needy New Zealanders.
By Susan Edmunds of RNZ
The Government announced it would give $50 a week to families who qualify for the in-work tax credit.
This means they must be a parent or caregiver working at least 30 hours a week combined as a couple or 20 hours as a single parent, not receiving a main benefit.
Finance Minister reveals fuel crisis support package for Kiwis – Watch on TVNZ+
In the current tax year, the income cut-off for receiving the tax credit was around $89,000 of annual household income for a family with one child, $112,000 for a family with two children and $135,000 for a family with three children.
The payment would continue until the price of 91 petrol drops below $3 a litre for four consecutive weeks, or a year, whichever comes first.
About 143,000 households would receive the $50 in full, from April 7. Another 14,000 would receive payment at a lower rate.
'Pretty outrageous'
Isaac Gunson, spokesperson for the Child Poverty Action Group, said it would help working for families but there was nothing for people relying on benefits.
"Close to a quarter of a million children live in households receiving a core benefit and the idea that there's no additional support for them that will be made available is pretty outrageous."
While Finance Minister Nicola Willis said they were potentially less affected because they did not have to travel to work, Gunson said they would still need to travel for groceries or job interviews.
He said the 3.1% increase in benefits from April 1 would not be enough.
"The idea that benefit dependent households won't face as big a downturn in their finances because they don't have the same obligations to go to work… that just doesn't stand up."
Getting targeted support 'out the door'
But Simplicity chief economist Shamubeel Eaqub said the policy was surprisingly generous, because the average amount that households spent on fuel each week before prices started to rise was $65.
"The immediate sticking point is going to be people who need to travel to work … this at least takes away one of those critical concerns that people might have had."
The support package would cost up to $373 million and be paid from the Budget 2026 operating allowance.
Eaqub said the Government might earn an extra $180 million in GST revenue as a result of higher petrol prices.
But Infometrics chief executive Brad Olsen said it was likely that would be diverted spending from other things, if the petrol price was higher.
"If you have to spend a whole bunch more on fuel that will attract more GST but unless your income has magically increased by the same amount, which it clearly hasn't, you're spending less on other things in the economy."
He said the support plan made sense because the Government wanted it to be timely and targeted.
"The fact that it can come in so quickly, and probably most importantly for the Government politically, is that you see direct money in your account rather than having to wait for a cashback or not noticing that it's come off your headline tax figure or something. That's useful. And I think also the Government has been quite clear that it was going to be limited.
"It highlights that, for the Government, they can't control what's happening across the world.
"And emitting a whole bunch of tax money they don't have anyway, and therefore having to borrow for it to fund much wider support, would be a fairly reckless economic decision. This one coming from within the current operating allowance has kicked something else that the Government might have done at budget time out and put this in instead. That seems to be a reasonable swap.
"The fact that it is targeted towards those who are already getting something like the in-work tax credit, does seem to be a pretty reasonable way to try and tightly target as much as possible the support and just get it out the door."
Gunson said the winter energy payment should be increased.
"At the moment it's about $20 a week for single parents and $31 a week for couples and people with children. That needs to go up irrespective of the current crisis that's going on.
"We'd like to see the Government lift it by at least 30% to make up for inflation as well as the current crisis to really help low-income families receiving a core benefit out."
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