Fuel price shock: Who misses out under tax credit boost – The Front Page

Every New Zealander is feeling the impact of the price of fuel.

It’s something Finance Minister Nicola Willis has mentioned time and time again.

“Put simply, Operation Epic Fury and its resulting fallout is hurting all Kiwis,” she said.

Willis has also made it clear that this Government won’t make what she cites as the same mistakes as the last, so any financial assistance must be targeted and temporary.

That’s why she’s announced extra support for low-to middle-income families.

From April 7, about 143,000 working families with children will get an extra $50 a week through a boost to the In-Work Tax Credit (IWTC).

The IWTC is a payment to families with dependent children where at least one parent is in paid employment, and neither parent receives a main benefit from Work and Income.

In the current tax year, 2025/26, the cut-off for receiving the IWTC is around $89,000 of annual family income for a family with one child, $112,000 for a family with two children, and $135,000 for a family with three children.

In addition, raising the base rate of IWTC extends eligibility to families that would not otherwise receive payments. Modelling suggests a further 14,000 families will become newly eligible, but will receive less than $50 per week because of income-dependent payments.

Prime Minister Christopher Luxon has said that he believes the Government has “struck the right balance of supporting those most in need at a very difficult time and ensuring we also don’t drive up inflation and higher levels of debt”.

But what about everybody else?

Journalist and publisher of The Kākā, Bernard Hickey, told The Front Page that the Government’s decision leaves out a large group of people who are struggling, but don’t have kids.

“It excludes people who are on the benefit or on New Zealand Superannuation or people who aren’t in Working for Families but are struggling. So those people who get the Independent Earners Tax Credit [actually the Independent Earner Tax Credit] miss out,” Hickey said.

“It is an unfair thing. We essentially have deified children and families as the ones who deserve all our help. Not surprisingly, there are a whole bunch of people who don’t have kids, and maybe they wanna have kids, but they can’t afford to have kids, cause they’re not getting any help now.”

Finance Minister Nicola Willis (left) and Associate Energy Minister Shane Jones take questions at the post-Cabinet press conference in the Beehive Theatrette at Parliament on Monday. Photo / Mark Mitchell

Willis has said that an untargeted response to the conflict could have long-lasting and painful consequences for the New Zealand economy.

“We saw this in the aftermath of Covid. Excessive spending more than doubled debt and sent inflation soaring and mortgage rates skyrocketing. Kiwis are still grappling with the effects of that today.”

All the while, New Zealand’s been put on notice by credit ratings agency Fitch, after it downgraded our outlook from “stable” to “negative”.

It’s kept the country’s core rating grade at AA+, but it’s watching Government debt levels “closely”.

“Borrowing large sums of money to insulate New Zealanders from this conflict, a conflict that is not of our making, would increase debt and debt-servicing costs and potentially lead to a credit rating downgrade,” Willis said on Monday.

“Why does that matter? Because that would further push out borrowing costs for the Government, for business, and for households.”

Hickey rejected the idea that the Government can’t afford anything more drastic.

“This is a choice of the Government’s making. This isn’t about whether the financial markets will let them borrow or whether the referees and global financial markets are blowing their whistle and saying: ‘Get your hand outta that ruck!’” he said.

“Governments believe that they’re better off not borrowing. I actually think it’s an ideological thing. They’re saying we want a small Government. Small Governments are better than big ones, and that’s simply not true.

“If you look at other small economies like ours with four or five million people, the ones that are the most successful, that are growing the fastest, that have the highest incomes, the best productivity growth, are the ones with the biggest governments. Denmark, Finland, Norway, places like this.

“A Government is not a household. When the Government chooses not to spend money, everything stops. It’s a bit like if you go into a shop and everyone in the shop suddenly decides at once not to spend any money, then nothing happens.

“Whereas a Government can go in there and start spending money to get things circulating again. That’s where the Government has a balance sheet it can use to essentially protect and act as a buffer.

“Now is that time. There’s a lot of talk about New Zealand wanting to save for a rainy day, and that we need to have a tight Budget to save for a rainy day. The rainy day is here.

“Now is the time to use that debt to essentially save people from a pretty rough time. This is a big shock. This wasn’t planned,” he said.

Listen to the full episode to hear more about:

• A cash-for-everyone approach
• High fuel prices, high GST return?
• Bond markets and ratings agencies
• Other options.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5pm. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.