Changes to accommodation supplement could negate benefits of fuel subsidy, Green MP says

Sunday, 17 May 2026

Social Development Minister Louise Upston and Greens social development spokesperson Ricardo Menéndez March.

Social Development Minister Louise Upston has introduced legislation to amend the accommodation supplement threshold for homeowners. But one MP says it could effectively negate the fuel subsidy for some families with children.

Upston introduced legislation to Parliament on Thursday that seeks to adjust eligibility rules for homeowners receiving the accommodation supplement (AS).

Currently, individuals can receive AS where their total assets are worth no more than $8100 (or $16,200 for a couple). But they have to contribute at least 30% of their income to housing costs before they are eligible.

With this law change, the threshold would increase from 30 to 40% for recipients who own their homes. It would not change for renters, boarders, or those on NZ Super, a Veteran’s Pension or a Supported Living Payment.

Upston said the changes target financial assistance to those most in need, to ensure “the system is fair”.

“The AS calculation has not changed for 33 years, and those with unsubsidised housing costs now generally pay a higher proportion of their income towards housing,” Upston said.

“This rebalances that to make it fairer. This will target the supplement to those with the greatest need, while continuing to support the most vulnerable groups.”

However, in a Regulatory Impact Statement on the bill, officials noted that the change will affect nearly 10,000 people - more than half of whom will be low-to-middle income working households, and 68.8% of whom are families with children.

Finance Minister Nicola Willis reveals a $373m relief package for working families to combat rising fuel costs, while Reserve Bank Governor Anna Breman warns of potential interest rate hikes to curb war-driven inflation.

For families with children, the estimated average reduction in entitlement will be $42 per week - just $8 less than the $50 weekly boost provided to working families with children under the Government’s fuel subsidy.

The Green Party’s social development spokesperson Ricardo Menéndez March said this risks negating any benefits that the fuel subsidy has provided to affected working families.

The Government’s fuel subsidy will remain in place until the start of April 2027, or until 91 octane petrol drops below $3 a litre for four consecutive weeks. If Upston’s bill passes, April 2027 is also when the AS eligibility changes would come into effect.

According to March, this would not only negate the benefits that the fuel subsidy has offered those families, but it demonstrates a “targeted stripping” of support for low and middle income households which would happen at the same time.

“The Government is going after low and middle income working families in a desperate attempt to save their budget,” he said.

“How … can you explain stripping working families of support during a cost of living and fossil fuel crisis, while handing tax cuts to landlords and spending over a billion on an LNG terminal?”

The policy, which was announced as part of Budget 2025, but only introduced as a law last week, is expected to save $36.6 million over four years.

The OECD has said that spending more than 30% of disposable income on housing is considered unaffordable.

Menéndez March said an additional $42 or $59 (the maximum reduction an AS recipient would see) per week is “a lifeline for working families feeling the pinch during a cost of living crisis”, and the Government should focus on addressing the high cost of housing instead.

The policy was originally designed to recognise that accommodation supplements subsidise homeowners to build significant personal assets. Those households also tend to have more options to meet their homeownership costs, like refinancing or taking on boarders, officials have said.

But the Organisation for Economic Co-operation and Development has stated that spending more than 30% of disposable income on housing is usually considered unaffordable. Spending 40% or more is considered an overburden.

Officials noted that increasing the threshold to 40% aligns with the OECD’s overburden rate.

But in the next line, they said: “Targeting the AS more tightly for some homeowners delivers on the Government’s priority of achieving fiscally sustainable public services.”

Officials also noted that the policy could have some more wide-ranging impacts. For example, some low-to-middle income households who are no longer eligible for an accommodation supplement could lose access to Community Services Cards.

“There is a risk that this could have indirect impacts on wider health and social outcomes,” they warned.

But the benefits ultimately outweighed the costs, they said, thanks to the potential to save the Government money - some of which will be used to fund adjustments to the area boundaries relied on for AS payments, to reflect changes in residential and urban development. Officials estimated those changes could benefit 4000 people.