Source: Radio New Zealand
Finance Minister Nicola Willis is downplaying the economic risks New Zealand faces in the wake of the war in the Middle East and closure of the Strait of Hormuz.
She warned on Monday of potential “acute cost of living pressures” ahead, but said fuel excise tax would not be cut, partly because it would encourage people to use more petrol.
Asked about the “worst case scenario” predicted by Treasury – Willis said she had been told in the event of a prolonged conflict in Iran, inflation in New Zealand could reach 3.7%.
She said ministers were meeting daily on the issue, two-and-half weeks into the US-Israeli assault on Iran.
“We’re also going ahead with a weekly strategic meeting at which further decisions are being taken. We’re also receiving written situation updates twice daily. And of course, I updated Cabinet today on our strategy to date.”
Finance Minister Nicola Willis explains government’s plan as petrol prices increase. RNZ / Samuel Rillstone
Willis said there were three parts to the strategy – first, a focus on “mitigating the impact of the war on critical supply chains”.
She said on 8 March, when the last update from the Ministry of Business, Innovation and Employment was issued, there was enough petrol either in the country or on the way for 57 days; diesel, 49 days and jet fuel, 47 days.
Thirteen vessels were on their way to New Zealand already, and three more set to leave soon.
The next update was due on Wednesday, and Willis said work was underway to make releases more frequent.
“It has been observed and reported on that demand at some petrol stations has increased, and we will factor that into our future updates.”
She said New Zealand’s largest fuel import terminal had not seen “any issues” with supply.
“Petrol prices have risen about 45 to 50 cents a litre, adding about $23 to the cost of filling an average car. We are acutely conscious of the impact this will be having for many New Zealanders.
“Diesel prices have risen about 72 cents a litre, adding about $36 to the cost of filling an average diesel vehicle.
“Despite these increases, prices are still slightly below their 2022 peak, although it is reasonable to assume they could go higher.”
Willis said the government was “anticipating, and to the extent possible mitigating the impact on the New Zealand economy, including what could potentially be acute cost of living pressures for some households”.
She said she had spoken to bank bosses who had assured her they would provide “an umbrella to businesses” they worked with.
“From the government’s point of view, we need to ensure that any support we provide to households is temporary, is targeted and is timely.”
She said official advice was that reducing fuel excise would “send the wrong signal” and not be sufficiently targeted.
More to come…
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
