Kerre Woodham: The fuel relief package is simply a morale booster

So help is on the way from the Government, as expected. The announcement came around 12:30pm yesterday. Thought it might be too late, because according to Donald Trump, “me and the Ayatollah are going to be controlling the Straits of Hormuz”. Be open very soon, he says. Well, that's good, isn't it? But in the meantime, while we wait for that to eventuate, Donald Trump and the Ayatollah cutting the ribbon over the Straits of Hormuz, 140,000 New Zealand families with kids will receive an extra $50 per week through the boost in the in-work tax credit. 

Christopher Luxon and Finance Minister Nicola Willis outlined the support package at Parliament yesterday. They said there will be some people who'll be disappointed, but it's a responsible decision that avoids hiking inflation, which the Reserve Bank Governor was warning about yesterday. The increase will begin from April 7th and it'll be paid weekly or fortnightly, depending on when people are paid. There'll be 143,000 families receiving it, as well as about 14,000 families who'll receive the credit but not as much – it'll be an abated rate. Beneficiaries and superannuitants won't receive the boost. The Government says, well, your payments are going to be adjusted from April 1st as per normal, so you'll be getting slightly more anyway.  

The in-work tax credit is a payment to families with dependent children where at least one parent is in paid employment and neither parent receives a main benefit from Work and Income. The cutoff for receiving the tax credit is around $89,000 of annual family income for a family with one child, $112,000 for a family with two children, $135,000 for a family with three. The added payment will last for one year or until the price of 91 octane petrol drops below $3 a litre for four consecutive weeks. It'll be estimated to cost around $373 million for the year, and Willis has promised the cost will be met within the government's operating allowance.  

So there you have it; that's the detail. It's pretty much as we expected, isn't it? And it's not perfect. There'll be some who feel overlooked and left out, others who'll say, you're all going soft, suck it up, put your head down, get through it like we used to, stop spending money on coffees and Netflix and you'll be fine. And others like me who see it more as a morale booster than an income booster. An acknowledgement that there have been tough times for the past five years and that many young families who are in the lower income because of where they are at their stage in life have been literally paying the price for the failings of well-paid public servants who made decisions that impacted on them and had absolutely no impact on the decision makers. When the going got tough, they took the money and they ran – they're sitting pretty now, thanks very much. And in the meantime, the reverberations and the repercussions and the ramifications of the decisions they made are literally being paid for by young Kiwi families. As the Finance Minister told Mike Hosking this morning, although they don't know the vehicular or transport circumstances of each individual low-income family, they know they'll be feeling the pinch from increased fuel prices across the board. 

“You are right that those families' circumstances will vary, but regardless of their circumstances, they will be facing increasing costs and many of them will be car users and many of them will experience other price pressures. In terms of diesel users, yes, we are very conscious that diesel prices have gone up massively. They're a huge input for our agricultural, manufacturing, industrial industries. The challenge we have there, Mike, is our number one goal is to make sure those industries have enough diesel to keep going, because that's what would do the most harm to the economy in terms of jobs and incomes. And so it would be wrong for us to be sending a price signal down now by reducing the price of diesel when actually, in future, if worst case scenarios played out, we might be having to preserve our supply of diesel. So that's what we're very focused on.” 

Which is a fair point. Lowering the price of diesel, allowing for a spend up on the diesel, is probably not a sensible thing if we have to bring in rationing. So I'd really very much like to get your feedback on this. As far as I see it, it's a morale booster. It's like, hang in there. Things are getting better. Things were getting better, just, and then along comes the attack on Iran and the tightening up of the Straits of Hormuz and the tightening up of the fuel supply, which is absolutely essential not just to the Western world, but to the entire world at the moment. It'll be over quickly or it won't. Hopefully it will. It won't last forever. The Reserve Bank Governor said she sees it hopefully as temporary and that good times are a coming. We've been promised them for so long we probably, we're probably a bit cynical. But the good times are coming, they are improving. This, I see, is a morale booster to those who are doing the hardest, doing it the toughest, who don't have the wiggle room, who don't have the disposable income, and I'm okay with that. 

See omnystudio.com/listener for privacy information.