About 140,000 families with children will receive an extra $50 per week through a boost to the In-Work Tax Credit as the Government seeks to provide some relief amid increasing fuel prices.
Prime Minister Christopher Luxon and Finance Minister Nicola Willis, who outlined the support package at Parliament today, admit that people ineligible for the payment will be disappointed but maintain it is a “responsible” decision that avoids hiking inflation.
The increase would begin from April 7 and be paid weekly or fortnightly, depending on when people were paid. About 143,000 families would receive it, as well as about 14,000 families who received the tax credit at an abated rate.
Beneficiaries and superannuitants wouldn’t receive the boost, the Government arguing their payments would be adjusted from April 1 as per normal.
The In-Work Tax Credit (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 tax credit 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.
The added payment would last for one year or until the price of 91-octane petrol drops below $3 a litre for four consecutive weeks.
It was estimated to cost $373 million for the year. Willis has promised the cost would be met within the Government’s operating allowance.
The Government will facilitate the weekly payment through an amendment to the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Bill currently before Parliament.
Over the weekend, petrol hit $4 a litre in some Auckland suburbs, with an average of $3.30 a litre for unleaded 91 and $3.61 a litre for unleaded 98 across the country.
Speaking to reporters, Luxon accepted the Government couldn’t alleviate pressure for everybody but claimed the support package targeted the most “squeezed middle”.
“These are the people that are doing it the toughest.”
“The Government has heard you, we are responding,” Willis said.
She hoped the additional payment could help people feed their children and commute to and from work and school.
Willis acknowledged some people would say it wasn’t enough but she reiterated her focus on controlling inflation.
“We are doing what we can do responsibly.”
She forcefully dismissed any suggestion of support extending to beneficiaries, saying no advice had been sought on the matter.
“Our focus is on working Kiwis.”
A potential cost of $373m would be drawn from Willis’ Budget 26 operating allowance of $2.4 billion.
She wouldn’t detail what cuts could be made to afford today’s support package, simply stating the Government would prioritise things that should be prioritised.
Willis said she was aware public transport would play an “important role” in responding to the fuel price shock and committed to ensuring it remained an option, while indicating the Government wasn’t planning on increasing current public transport subsidies.
At multiple points in the press conference, Luxon reinforced the need to learn from the government support package administered during the Covid-19 pandemic and how such assistance must be targeted so as not to inflate the economy.
NZ First leader Winston Peters said he didn’t think the Government’s relief package was enough to help New Zealanders, but “it’s a serious start”.
He said the party wished it could do more but was limited to by current economic constraints on the Government.
Act’s David Seymour called the announcement “sensible and proportionate”.
“This response avoids the kind of Covid blowout New Zealanders are still paying for. The previous Government spent all the money, and while we are still cleaning up that mess, it limits our ability to respond to new pressures. That means any support we provide now must be disciplined, affordable, and carefully designed.”
Labour leader Chris Hipkins said the Government’s support was a “start” but acknowledged “a lot of New Zealanders who won’t get anything” from today’s announcement.
“But for those who are getting a bit of extra support, I know they’ll welcome that.”
He said there was a question over what else the Government may have planned, including what support it could give to superannuants, students and other New Zealand who don’t have children.
The Green Party’s reaction was far more critical, saying it left too many New Zealanders behind.
“The Government’s narrow tweaks to tax credits leaves behind the tens of thousands of people their economic plan has pushed out of work, only to then punish with new obligations and sanctions,” said Green Party co-leader Chlöe Swarbrick.
“So much for planning for the ‘worst-case scenario.’ There is no plan to support people on to public transport and reduce fuel demand, no plan to prevent corporations price-gouging while families cut back on groceries.”
Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.