The Government is moving quickly to provide extra support for low-to-middle-income working families as conflict in the Middle East drives up fuel prices and adds pressure to household budgets.
From 7 April, about 143,000 working families with children will get an extra $50 a week through a boost to the in-work tax credit. The boost will also expand eligibility to around 14,000 additional working families, who will receive the tax credit at an abated rate.
The increase will be temporary, lasting for one year or until the price of 91 octane petrol drops below $3 a litre for four consecutive weeks.
“This temporary boost will deliver support to working families who are under significant cost-of-living pressure, without making inflation worse or further driving up Government debt,” Nicola Willis says.
“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. We know these families will be hit particularly hard by the global fuel-price shock. We are delivering them timely relief.
“The Government will implement these changes at pace. Tomorrow we will introduce an Amendment Paper to the Taxation Bill currently before Parliament, so these changes can be enacted from 1 April.
“Most eligible households will not need to do anything to receive the increase. It will be paid directly into their bank accounts, starting on 7 April if they are paid weekly, and 14 April if they are paid fortnightly.
“We are very aware that almost all Kiwi businesses and families are feeling price pressures as a result of the global shockwaves hitting New Zealand, but equally we know that responding with large, untargeted Government spending programmes could make things worse for Kiwis by adding more pressure to inflation and debt. We are making careful choices in order to protect New Zealand’s economic future.
“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.
"That is why we are focused on temporary, timely support that is targeted to the workers who need it most, while continuing to manage the public finances carefully.
“The policy is estimated to cost a one-off $373 million if it runs for the full year and less if it does not. There is no ongoing cost in future years because the change is time-limited.
The cost will count against the Government’s operating allowance for the 2026 Budget so has already been factored into the 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.
“We cannot control global oil markets or international conflicts.
“But we can soften the impact on working families who cannot easily avoid higher fuel costs by delivering support in a responsible and well-targeted way.”