Christopher Luxon
Minister, Ministerial Services
Minister, National Security and Intelligence
Prime Minister
Permanent linkWell, kia ora, good afternoon, everyone. Look, we are now into the seventh week of the Middle East conflict and the trajectory of the conflict remains unclear. The ceasefire is fragile and after briefly opening up over the weekend, the Strait of Hormuz, as you all well know, is again closed. That underscores the unpredictability and the volatility of this conflict.
New Zealand has no control over the situation and we are not party to the conflict, yet the impacts and the potential risks on our country are significant. The good news is that New Zealand continues to have sufficient levels of petrol, diesel and jet fuel, as shown in the fuel stocks update released today. We have 54 days cover of petrol, 45 days of diesel and 51 days of jet fuel. Stocks for petrol and diesel are slightly down on the last update, while jet stocks are up. All fluctuations are normal and within expectations, so we remain at phase one of our national fuel response plan. Since the last update, one ship has finished discharging fuel, three ships have entered New Zealand sovereign waters, and two additional ships are now on their way, currently in international waters. Fuel importers have reported no delayed shipments or any issues with future orders, and have given us good confidence of planned orders extending into June.
While we have good levels of fuel in New Zealand more on the way, we continue to plan ahead for the risk of a potential shortage in the future. Shoring up supply is the single most important thing that we can do to protect our economy, because a significant shortage of fuel would cost thousands of jobs and incomes. There are various pieces of work underway on shoring up supply, and we will keep the public updated as work progresses.
Overnight on Friday, I attended a meeting convened by Prime Minister Starmer and President Macron to discuss the Strait of Hormuz. The meeting brought together leaders from a quarter of the world’s states who, like us, want to see the strait reopened for the free flow of shipping as quickly as possible. I conveyed New Zealand’s position that as a trading nation, the right of freedom of navigation is critical for New Zealand, and we support all diplomatic efforts to restore that right in the Strait of Hormuz. Whether it is the Strait of Hormuz or the Strait of Gibraltar, whether the Red Sea or the Bass Strait, it’s critical to Kiwi companies and their workers and their exports that they get to market without having to pay tolls or facing undue impediments. That’s why it’s important that we work with our friends to avoid a precedent taking hold in the Middle East that ultimately might undermine the right to passage safe passage elsewhere in the world. I also used the meeting to emphasise the heavy impacts of the conflict on the Pacific region in general.
There was a clear consensus in the meeting that de-escalation remains the priority because the longer it goes on, the worse it is for the world economy. President Macron and Prime Minister Starmer made clear that France and the UK are prepared to lead a strictly defensive multinational mission in the Strait of Hormuz to provide reassurance to commercial shipping. This would only be possible under certain conditions, namely a sustainable ceasefire between the parties, for one thing, and in full conformity with international law for another.
It’s clearly in New Zealand’s interests to support efforts to restore freedom of navigation in the Strait of Hormuz. We will continue to look for ways to do so, whether that’s through our diplomatic efforts or other means. And if we were to participate in a UK and French-led multinational mission to help secure the Strait of Hormuz, that’s something that we would decide at Cabinet before announcing anything further.
Last week, the IMF reported that it had lowered its global economic growth forecasts. Before the conflict, the IMF had predicted the global economy would grow 3.3 percent this year, and that has now been revised down to 3.1 percent, albeit all of that is heavily, heavily caveated on how long the crisis persists. And while the IMF did not have any specific forecast for New
Zealand, we know that this conflict will have an impact on our inflation and growth. Inflation will go up and growth will go down—there is no escaping that—but we cannot say by how much because all of that depends on the length and scale of the conflict and the closure of shipping routes, so our focus is on ensuring we minimise the economic impacts as much as we possibly can and avoid doing anything that makes that impact worse. That is why we are being careful to ensure that any support we provide to help with the rising cost of fuel is targeted, temporary and timely, and affordable for New Zealand.
As we look for ways to help people with the immediate pressures, we must avoid the mistakes of COVID and keep an eye on the long term to protect New Zealand’s economic future. This approach has been reinforced by the IMF, which said in its own report, “The current hostilities in the Middle East pose immediate policy trade-offs: between fighting inflation and preserving growth and between supporting those affected by the rising cost of living and rebuilding fiscal buffers.” That aligns with what we’ve been saying from day one of this fuel crisis.
Taking the approach of targeting support to people most affected by the rising cost of fuel, we have provided a temporary increase of $50 per week in Government support for low and middle-income workers with children. We’ve also provided a 30 percent increase to the mileage reimbursement rate for home and community support workers, and today we are announcing a similar measure for relief teachers.
As we navigate the fuel crisis, a top priority for us is to ensure that our schools remain open and students stay engaged in their learning. We know how incredibly damaging the COVID lockdowns were for our students and so we’re doing everything that we can to prevent a situation like that happening again. Some schools that are particularly isolated and harder to get to have reported challenges with getting relief teachers due to rising fuel costs, so to support staffing schools in rural and isolated communities, the Government has agreed to a temporary increase to relief teacher transport allowance mileage rates. Additionally, we’re increasing the conveyance allowance by 30 percent to support rural families with the increased cost of driving their children to school or to the nearest bus route.
We also know that the sharp rise in diesel prices is putting huge pressure on schools that run on diesel boilers, so we’re investing $37 million for 70 schools across the country to replace their diesel boilers quickly. This investment will free these schools up from their dependence on diesel, ease operational cost pressures and protect them from future price shocks.
All of these measures are consistent with our approach of delivering temporary, timely and targeted support by prioritising financial relief to those communities where fuel costs have the greatest impact. Education is a top priority for this Government and in challenging times we remain extremely committed to raising student achievement, lifting school attendance, and building the skills and the capability our economy needs for the long term. And with that, I’ll hand over to Erica to take you through more of the details of today’s announcement.