Hang on, help is on the way: Government signals fuel relief package

Thursday, 19 March 2026

Prime Minister Christopher Luxon outlines the Government’s plan to secure New Zealand’s fuel stocks and manage economic pressure as the Middle East conflict impacts global supply chains and domestic petrol prices.

Finance Minister Nicola Willis has revealed she has instructed Inland Revenue and Treasury officials to work up a package to help households with the cost of fuel.

Willis said no decisions had yet been taken to Cabinet but it is understood the Government is looking to have something ready within weeks to deploy before May’s Budget.

“We’re moving very quickly. I have already instructed the Inland Revenue Department to work on some options together with Treasury, and I can confirm that we’re looking at the tax and transfer system,” Willis said on Thursday.

Stuff understands the Government is particularly focussed on relieving the pressure on working households, so it’s unlikely any package would include increases to main benefits.

Prime Minister Christopher Luxon and Finance Minister Nicola Willis facing questions on the fuel crisis on Thursday.

The finance minister has spoken repeatedly of the need to keep any relief timely, targeted and temporary, which the Government views as one of the key learnings from the cash injections of the Covid-era.

Spending during the pandemic “wasn’t well-targeted, wasn’t necessarily time-defined and timely, and it also wasn’t actually temporary in nature, [and] that ended up causing a huge amount of short-term gain for long-term pain,” Prime Minister Christopher Luxon said.

Willis has ruled out any blanket decrease in fuel tax - the Government believes this is too much of a blunt tool, which would result in financial support going to people who do not need it.

A key consideration in any deployment of support will be the avoidance of stimulating spending too much and re-igniting the inflation fire.

As the conflict in Iran effectively closes the Strait of Hormuz, New Zealanders are feeling the burn at the pump. Acting PM David Seymour says while no formal request for military aid has been made by the US, the Cabinet isn't ruling it out.

“First and foremost, we want to have measures that have a minimal impact on driving up inflation,” Luxon said.

Aside from inflationary pressures - the targeting and precision of the intervention is top of mind - the Government says it will be very specific and up front about the temporary nature of any increases in payments.

Targeting support through tax rates is difficult because any cuts to the lower end tax rates are also received by those in higher tax brackets, due to our progressive tax system.

The most obvious and likely mechanism is using Working for Families to target the households who need support the most - this tax credit can only be received by those households with children, which would obviously exclude some workers.

“Support needs to be timely. What that implies is that we need to use the systems we already have. Inventing a brand new system would both take time, cause delay, potentially mean that money wouldn’t reach the people that it’s meant to reach,” Willis said.

Prime Minister Christopher Luxon said things would get worst before they get better.

“I just want to acknowledge, again, that that does not mean that there won’t be other families who are affected by this… these price increases are impacting every New Zealander, but it would be at this point irresponsible for us to help every New Zealander.”

Expect things to happen quickly.

The finance minister’s understood to have asked Inland Revenue how quickly they can get money out the door so that she can push the cash button as soon as Treasury tells her the time is right.

The Government noted that increased fuel prices were already hurting too many households. The situation is going to get worse before it gets better, Luxon said, and Willis cautioned that people could not be completely protected from petrol price pain.

“What we are focused on is ensuring that we are able to give timely and effective support to those families who are most impacted. But we have to be careful not to raise an expectation that we will be able to blunt all of the pain that is occurring,” Willis said.