Christopher Luxon and Nicola Willis are in a lose-lose situation. We should keep calm and carry on – Editorial
Christopher Luxon and Nicola Willis have found themselves in a lose-lose situation.
Kiwis have already been doing it tough for years and we’re yet to recover from the shock of Covid-19 on our economy.
Then 2026 slapped many of us right in the face.
The rapidly rising cost of fuel due to the war in Iran and the choking of the Strait of Hormuz, which is preventing ships carrying oil from reaching ports around the world, has seen some start to panic.
Over the weekend, petrol hit $4 a litre in some Auckland suburbs.
Luxon has said there is no need to panic. He is right.
On Monday, new figures on New Zealand’s fuel stock reserves and shipments on the way to New Zealand showed that as of March 18, the country had 49.9 days’ worth of petrol. There was 45.5 days of diesel and 44.7 days of jet fuel.
But oil is used for almost everything, whether it’s through the manufacturing or transportation process.
So, the problem to solve for Luxon and Willis is: how do we provide some relief without drawing comparisons to former Finance Minister Grant Robertson’s liberal use of the money hose?
What was announced yesterday was promoted as temporary and targeted.
From April 7, about 143,000 working families with children will get an extra $50 a week through a boost to the In-Work Tax Credit. The boost will also expand eligibility to about 14,000 additional working families, who will receive the tax credit at an abated rate.
The increase, Willis said, will last for one year or until the price of 91-octane petrol drops below $3 a litre for four consecutive weeks.
We cannot control global oil markets, so which one do you think occurs first?
Willis said this won’t make inflation worse or further increase government debt. The measures are expected to cost $373 million, she added, and will count against the Government’s operating allowance for the 2026 Budget.
It is vital the Finance Minister sticks to her word and this doesn’t hamstring the country’s future further.
“The Government is conscious that a careless response to this crisis could have long-lasting and painful consequences,” Willis said.
“We saw this in the aftermath of Covid, where excessive spending more than doubled debt and sent inflation soaring and mortgage rates skyrocketing. Kiwis are still grappling with the effects of that today.”
Willis has also blown a big hole in her election-year Budget. The National Party will likely ponder if the nearly $400m spent is worth the political opportunity cost.
Ultimately, few people will be satisfied with yesterday’s announcement.
Some political commentators on the right have been calling for all sorts of bizarre measures, including removing GST from fuel and even encouraging mandating working from home.
Is this not exactly the sort of government overreach they railed against in the Covid years? How short are their collective memories.
Do not be surprised if this week they say in the same breath that these measures by Luxon and Willis are both too light and also raise concerns about government spending.
The announcement will also be attacked from the left, Labour in particular, who will suggest more relief is needed – especially if the crisis worsens. The Greens have already called for free public transport.
What they won’t mention, however, is the impact of adding hundreds of millions or billions of dollars more to our already significant public debt problem.
We, instead, should keep calm and carry on.
But the country is wanting action, Luxon is under pressure personally and it’s an election year.