New Zealand unveils temporary fuel relief package
- Sydney (24 March) New Zealand’s government will increase its in-work tax credit by NZ$50/week for up to a year from April, helping primarily working-class families address fuel price pressures stemming from the US-Israeli war in Iran.
The scheme is going to support over 140,000 households eligible for the in-work tax credit – which primarily helps families that earn less than NZ$44,900/year – Finance Minister Nicola Willis MP said on 24 March. Households earning above the income threshold are eligible for partial, income-abated credits under certain circumstances.
New Zealand’s in-work tax credit boost will run for 12 months or until the price of unleaded 91 octane petrol drops below NZ$3/litre for a month, Willis said.
The country’s average unleaded 91 octane petrol price stood at NZ$3.35/litre today, up 35% from a month ago because of disruptions around the Strait of Hormuz, data from price monitor Gaspy show.
New Zealand’s in-work tax credit increase will cost up to NZ$373m and be funded without any new borrowing, Willis said. The government may consider other support measures that address pricing pressures and limit debt increases, she added.
Willis’ reluctance to borrow comes less than a week after credit rating agency Fitch Ratings downgraded New Zealand’s default outlook from stable to negative, without adjusting its credit rating.
New Zealand’s borrowing costs have also increased over the last month, with its 10-year government bond yield rising from 4.38% on 24 February to 4.83% today. The country’s 10-year bond yield last exceeded 4.83% in April 2024. At that time, New Zealand’s overnight cash rate stood at 5.5%, more than double its current rate of 2.25%.
New Zealand does not directly rely on the Strait of Hormuz for oil shipments. It mostly imports refined oil products from producers in South Korea, Singapore, Malaysia, and Japan. But those producers’ crude feedstock move through the strait.
Refiners have not cancelled or delayed any oil shipments to New Zealand since the Iran war began, Willis said on 23 March.
But this could change. Six ships have cancelled petroleum deliveries to Australia since the war began, Australia’s Minister for Energy Chris Bowen told the ABC on 22 March.
New Zealand had 23 days of fuel stocks – including petrol, diesel, and jet fuel – on land, with another 24 days of fuel in transit on 18 March, according to the latest data from the Ministry of Business, Innovation, and Employment.