Fuel prices: Government to announce support package for families under the pump as petrol hits $4 a litre in some areas

The Government will announce a new support package today expected to help a narrow window of working families feeling pressure at the pump amid increased fuel prices.  Prime Minister Christopher Luxon has said there is no need to panic as ships carrying fuel struggle to get through the Strait of Hormuz amid the conflict in the Middle East.  Finance Minister Nicola Willis said on Monday that the Government’s focus was on “workers ... families with children ... and low-to-middle income households”.  Last week, Willis said the Government was looking at the Working for Families tax credit scheme to deliver cost-of-living relief.  One tax credit it would likely look to is the In-Work Tax Credit (IWTC), administered by Inland Revenue, which goes to about 150,000 low- to-middle-income families with dependent children.  To be eligible for a full credit, a family must have a working family member and a combined family income of less than $42,700 (as of April 1 this year it rises to $44,900).  Because the tax credit slowly abates as a household’s income rises above that threshold, families earning more than this can still receive a large portion of the full tax credit.  The Government could increase the amount of this tax credit or change the way it abates to increase those families’ incomes.  The IWTC does not go to families who do not work and live on a benefit, meaning some of the poorest households are excluded. The Government has signalled clearly it would be targeting support at workers rather than beneficiaries.  Willis noted that any support would be “temporary” and “timely”. The Government has levers it could pull to temporarily increase the tax credit threshold.  Another tool for the Government to use is the Independent Earner Tax Credit, which goes to low-to-middle income New Zealanders who do not receive Working for Families, although the Government’s insistence that support goes to households with children suggests this is now unlikely.  The announcement on the support package is expected later today.  On Monday, new figures on New Zealand’s fuel stock reserves and shipments on the way to New Zealand showed that as of March 18, the country had 49.9 days’ worth of petrol. There was 45.5 days of diesel and 44.7 days of jet fuel.  The combined stock total of fuel either in-country or on the water was 46.9 days. The next update is expected tomorrow.  Also yesterday, Associate Energy Minister Shane Jones announced plans to let fuel that meets Australian criteria into the country to provide fuel importers with more options and wipe “unnecessary technical barriers” amid the tightening global fuel market.  “Countries that can access a wider range of shipments are better placed to keep fuel flowing,” Jones said.  Over the weekend, petrol hit $4 a litre in some Auckland suburbs, with an average of $3.30 a litre for unleaded 91 and $3.61 a litre for unleaded 98 across the country.  Speaking at a press conference shortly after his Cabinet meeting on Monday, Luxon said New Zealanders did not need to “panic” over fuel levels and that he wanted to reassure people “we don’t have a supply problem”.  At that press conference, Willis and Luxon warned that the soon-to-be-announced support would be “targeted”. Although fuel prices and other economic offshoots from the conflict were “impacting almost every New Zealander, unfortunately, the Government is not in a position to mitigate that impact on everyone”.  This month, the Government launched the “National Fuel Plan” with similarities to the Covid alert level system in that it included four levels of escalation to respond to degrees of disruption to fuel supply.  The fewest rules and conditions are at Level 1, while the most severe are found at Level 4. New Zealand is currently at level 1 which primarily involves the Government co-ordinating with industry to limit any potential disruptio...

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