By Craig McCulloch, Deputy Political Editor RNZ
Almost 150,000 families will receive an extra $50 a week for up to a year to help ease the pain from soaring petrol prices driven up by the war in the Middle East.
Speaking at a media conference at the Beehive on Tuesday, Finance Minister Nicola Willis said the relief would come through a boost to the in-work tax credit – part of the Working for Families scheme.
That means only low-to-middle-income workers who have children are eligible. It excludes beneficiaries, superannuitants and those without children.
“The policy is carefully targeted to families in the squeezed middle – parents who are working hard for a living, are not eligible for main benefits, and yet have modest household incomes with which to support their children,” Willis said.
“We know these families will be hit particularly hard by the global fuel-price shock. We are delivering them timely relief.”
Asked why beneficiaries missed out, Willis said welfare payments would increase from the start of April due to usual adjustments in line with inflation.
The temporary increase would last for as long as one year, or until the price of 91 octane petrol dropped below $3 a litre for four weeks in a row, Willis said.
About 143,000 households would start seeing the full benefit in their bank accounts from 7 April, if they were paid weekly, or 14 April, if they were paid fortnightly. A further 14,000 households would receive the support but at a lesser rate.
In the current tax year, the 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 policy was estimated to cost $373 million if it ran for a full year, or less if it did not, Willis said.
Willis said that cost would come out of the government’s operating allowance for this year’s Budget, meaning it had already been factored into Treasury’s fiscal forecast.
“Funding the policy this way will not add to forecast debt or inflationary pressures. It is consistent with the government’s fiscal strategy which seeks to balance the books and bend the debt curve down.”
Willis declined to detail what programmes might be cut in order to cover the cost of the relief package, saying only that the government would prioritise.
She said the government could not relieve price pressures for all businesses and families who were feeling price pressures. She said “large, untargeted government spending programmes” could make the situation worse by driving up inflation and debt.
“The government is conscious that a careless response to this crisis could have long-lasting and painful consequences. We saw this in the aftermath of Covid, where excessive spending more than doubled debt and sent inflation soaring and mortgage rates skyrocketing. Kiwis are still grappling with the effects of that today.”
Speaking to reporters, Prime Minister Christopher Luxon said the package struck the right balance.
“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 would do more damage to our economy, which has just started growing again.”
The support package will be progressed through a change to legislation before Parliament, expected to be passed on Wednesday.
Opposition says support package doesn’t go far enough
Responding later at Parliament, Labour leader Chris Hipkins said the support package was “a start”, but ignored superannuitants, students, and those without children.
“They’re all being hit by increased fuel prices – and they’ll be asking what about us?”
Greens’ co-leader Chlöe Swarbrick characterised the support as “narrow tweaks” and said it left behind tens of thousands of people who the government had “pushed out of work”.
“There is no plan to support people onto public transport and reduce fuel demand, no plan to prevent corporations price gouging while families cut back on groceries.”
Te Pāti Māori co-leader Debbie Ngarewa-Packer said she expected more from the government.
“We haven’t seen support for students, for superannuitants, for those on benefits, for those in rural communities,” she said. “The government overpromised and again, has underdelivered.”
Speaking to reporters later on Tuesday, NZ First leader Winston Peters said the relief was a “serious start”. He said he would have liked it to go further, but the government was constrained by its finances.
“This country’s economy is not in great shape. We inherited a disaster, and it’s taking us longer to turn it around,” Peters said. “Of course, we’d like to do more, but in the meantime, we’ve got a Budget to prepare.”
ACT leader David Seymour said the coalition could not offer much more “because Labour spent all the money”.
Seymour said he was confident the government would find the funds required for the support by cutting wasteful spending: “Obviously there are other extra things that could have been done with that $2.4 billion [operating allowance] that now won’t be.”
The article originally appeared on RNZ
