Spectre of Middle East war hovers over residential development summit
Friday, 27 March 2026
Universal fuel tax cuts in response to the impact of the Middle East war sound appealing, but they won't happen because the Government is acting responsibly, says senior minister Chris Bishop.
And a similar approach was being taken with the systemic challenges facing New Zealand, including the structural deficit, planning reform and infrastructure funding, he told attendees at a property summit on Thursday.
The minister, whose portfolios include housing, infrastructure and RMA reform, was speaking at the Property Council’s annual residential development summit in Auckland.
But with fuel costs soaring and supply concerns growing he chose to address the crisis head-on, before focusing on development-related issues.
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There was no doubt the conflict in the Middle East was creating enormous disruption for everybody, and particularly the economy, but it was also exposing an uncomfortable reality for New Zealand, he said.
“We are facing a triple headwind of long standing, systemic economic issues, such as low productivity and infrastructure deficit, increasing exposure to shocks, such as weather events or offshore conflicts, and starting from a position where we have high debt.
“We don't have the power to control peace in the Middle East, obviously, but we do have the power to control how we respond as a government, and to respond responsibly and in the national interest.”
Treasury had advised that any support given must be timely, targeted and temporary, Bishop said.
That was why the Government had elected to provide cost-of-living relief to about 143,000 working families with children via a boost to the in-work tax credit for one year.
The Government was determined the response did not fuel inflation further, and so the relief package would come from the Budget 2026 operating allowance which meant trade-offs elsewhere, he said.
“There are calls from many people to simply borrow a large amount of money and give everyone a fuel-tax cut, and do a cost-of-living payment. I understand the appeal of those things.
“But the reality is, it could lead to a self reinforcing vicious cycle if we do not act responsibly.”
With the interest bill on government debt already at $8.9 billion a year and rising, debt servicing took up a growing share of revenue that forced increased taxes or cuts to public services and infrastructure, he said.
“In turn, that reduces long-term economic growth, which then puts downward pressure on government revenue and makes the debt even less manageable.
“It is not economically credible to continue to run structural deficits. That way lies economic ruination. So we are committed to protecting living standards, and that depends on strong fiscal discipline.”
Tackling difficult NZ issues
Bishop said along with dealing with the current crisis, and US President Donald Trump's tariffs last year, the Government was trying to set New Zealand up for success in the 2030s and beyond.
It was doing that by tackling a series of difficult issues that successive governments, both National and Labour, had put in the too-hard basket, he said.
Earthquake prone building reform, RMA reform, local government reform and work on infrastructure funding and financing all counted as important system level changes that aimed to set the country up for growth.
But the single biggest thing being done was RMA reform, and the new planning system would make it easier to build the homes the country needed, and “obliterate” stupidity from the system, he said.
Work was also being done to create a flexible infrastructure funding and financing system to match the flexible planning system.
That included the replacement of development contributions with development levies based on the concept of growth paying for growth, and establishing independent regulatory oversight of those levies with the Commerce Commission instead of councils.
“Now, we're on the journey, but there's a long way to go,” Bishop said. “I don't want to rush it through. I want to get the details right as this really matters.”
The summit’s line up covered topics from earthquake prone building and consent system reforms to building infrastructure for future communities.
But the war in the Middle East and its economic impact was raised in many sessions, from economist Tony Alexander’s presentation on economic horizons to a panel on future-proofing the market.
Property market insights
Participants in the future-proofing panel agreed that - prior to developments in the Middle East - the worst of the property market downturn was over, and there were positive signs it was moving beyond a protracted low.
But BNZ head of property northern Darren Comber said the conflict’s impact was a bit like a “punch in the nose” for the market, and while “hopefully, there’ll be a quick resolution” it remained to be seen how it played out.
Icon Construction New Zealand director Dan Bosher said his company was quite “worry fit” and was focusing on the things it could control, such as locking down supply side risks.
“The concerns are more to do with the destabilising effect on how confident people are about progressing with big projects.”
Bayleys national director of projects Suzie Wigglesworth said over the last few weeks they had definitely seen a bit of unrest with some buyers, depending on their circumstances.
“There is uncertainty around where it will end up, but the reality is people have to live somewhere and their housing needs change over time as they partner up, have kids, divorce, become empty nesters, grow old and so on.”
That meant house sales would always keep occurring, and currently they were seeing more new listings hitting the market, and good inquiry levels, which was a good sign for the future, she said.