Iran war: ANZ urges Government to avoid debt trap with its new fuel support package

Monday, 23 March 2026

ANZ has joined the Treasury in advising the Government to exercise caution over measures it will announce on Tuesday to assist people struggling with the higher cost of fuel.

Finance Minister Nicola Willis made clear that the support she would announce tomorrow would be focused on helping working families with children who were on “lower to middle” incomes.

Price comparison site Gaspy reported that the average price of fuel on Monday had risen to $3.33 a litre for 91 octane petrol and just under $3.16 a litre for diesel.

That is up 84 cents and $1.35, respectively, on their price 28 days ago, before the conflict in the Middle East.

Read more:

• Treasury advises Govt to consider long-term view when weighing up fuel relief

• Fuel crisis deepens as Government moves to twice weekly updates

• Iran war: Pre-conflict report warned diesel stocks might not be sufficient

Willis said the price rises were already hurting people and businesses.

Prime Minister Christopher Luxon said the increases were very tough for people who were struggling to make ends meet.

There is speculation the support could come in the form of extra payments made through the Working for Families transfer system.

ANZ senior economist Miles Workman cautioned “the wrong policy response” could add to people’s economic woes over the medium term.

Any support, even if temporary, should be fiscally neutral, meaning that it did not add to existing forecasts for government debt, he said.

“Fiscally neutral doesn’t mean doing nothing — it means ensuring you’re helping those who need it most, while finding a way to pay for that other than by adding to debt.

“It means not adding to the inflation impulse, which could cause the Reserve Bank to hike the Official Cash Rate more aggressively than otherwise.”

The lesson from Covid was the alternative option “did not end well”, he said.

Treasury chief strategist Struan Little sounded a similar alarm on Thursday, when he said Treasury’s advice was “not to let the price of ‘91’ at the pump today distract us all from the cost of net core Crown debt tomorrow”.

Workman said he saw ANZ’s advice as being in line with the Treasury’s comments.

ANZ’s preliminary assessment was that the Government would need to borrow an extra $10 billion over and above Treasury’s December forecast by 2030 because of broader fiscal pressures, even if its fuel support package was funded in a way that did not add to debt.

Based on that assumption and the bank’s latest forecasts for economic growth, it believed net core Crown debt — which is currently forecast to peak at 46.9% of GDP in 2028 — could still “just sneak” under the 50% ceiling that Treasury has promoted as a fiscally prudent cap in normal times.