Iran War: Government working on support package as Christopher Luxon admits situation ‘could get worse’

Thursday, 19 March 2026

Finance Minister Nicola Willis says the Government is working on a package of targeted financial support for the families worst hit by high fuel costs brought on by the Iran war.

Her comments came as Prime Minister Christopher Luxon stepped up his rhetoric on the matter, saying “things could get worse before they actually get better”.

Oil prices spiked over USD$110 a barrel overnight suggesting even higher petrol prices are on their way to New Zealand.

Willis said she had asked officials from the Inland Revenue Department and Treasury to look at developing a targeted support package, and it would be a “tax and transfer” system.

This suggests that a targeted increase to Working For Families could be the format for the support.

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Willis made clear that she was not looking at options to lower fuel costs directly through a change to fuel taxes or the like.

“These price increases are impacting every New Zealander, but it would be at this point irresponsible for us to help every New Zealander,” Willis said.

“I want to be straight that the Government won't be able to alleviate all of that pressure, but I am exploring measures, and have actively sought advice on methods by which we can provide very timely, temporary and targeted support to those households we anticipate will be most affected by increasing prices and who are not able to avoid them.”

Willis would not be drawn on whether families would need to have children to be eligible for the support.

She said the Government was looking to use existing systems rather than designing anything from scratch.

“The support needs to be temporary, which means that at the point we introduce it, we need to be clear for what time period it will last, and the support needs to be targeted, which means that we have to ensure it is going to those households whose budgets are most squeezed,” Willis said.

She said not all families impacted by the higher fuel costs would get help.

Luxon said one of the conditions for the support was that it would only have a small impact on inflation.

“We want to have measures that have a minimal impact on driving up inflation. Obviously. The second thing very strong is to make sure that we keep coherence in our fiscal strategy,” Luxon said.

He said the support the last Government provided through Covid was not well-targeted or temporary enough.

“That ended up causing a huge amount of short term gain for long term pain - that’s essentially what we've been dealing with.”

Situation getting worse

Petrol prices have already risen more than 20% since the conflict began, Willis said, with diesel up around 45%.

She said advice she had received on where prices were headed as the crisis continues amounted to 'how long is a piece of string'.

Luxon said the Government was preparing for a scenario lasting at least eight to 12 weeks, at which point New Zealand’s major sources of refined fuel in South Korea and Singapore would be struggling to access new crude oil.

He noted that even if a ceasefire was announced today the damage to oil infrastructure would mean it would be some time before prices came down.

'Even in the unlikely event that the ceasefire is announced tomorrow, the effects on global supply chains and fuel supplies won't be immediately resolved,' he said.

Luxon said New Zealand was 'well-positioned' relative to other countries, but acknowledged the situation was worsening.