New Zealand to reconsider fuel relief scheme

Sydney (28 July)

The New Zealand Government will consider whether to maintain its NZ$50/week in-work tax credit increase – which it introduced in March to address high fuel costs – next week because of a recent, fleeting drop in petrol prices.

“When we introduced a boost to the in-work tax credit … we put a trigger in place. That was intended to ensure that [the boost] lasted either 12 months or for a more limited period if we saw [petrol] prices being sustained at lower levels,” Finance Minister Nicola Willis told reporters on 27 July.

The Government expects the Ministry of Business, Innovation, and Employment (MBIE) to report that the average price of New Zealand petrol dipped below NZ$3/litre over the last four consecutive weeks on 29 July, Willis said.

But Cabinet will consider whether it is appropriate to remove the tax credit increase given recent fuel price spikes linked to renewed violence around the Strait of Hormuz, according to Willis.

“[In March, we anticipated that] if you saw the price [of petrol] fall below NZ$3/litre for four weeks in a row, that would mean you were out of the woods,” Willis said. “[But] if prices are above NZ$3 … there would continue to be pressure on the families who we’ve sought [to support],” Willis added.

Unleaded 91 octane petrol prices averaged NZ$3.01/litre – across New Zealand – early on 28 July, up $0.06/litre on the month, data from price monitor Gaspy show. And petrol prices may not fall quickly. Brent crude futures last traded at $89.79/barrel (NZ$155.24/barrel) on 27 July, up from $72.60/barrel on 26 June, because of violence and maritime disruptions around the Strait of Hormuz.

New Zealand buys refined oil products from producers in South Korea, Singapore, Malaysia, and Japan. New Zealand and Singapore have signed an Agreement on Trade in Essential Supplies, which includes a pledge not to impose export restrictions on fuel, medical, and construction products.

By Avinash Govind