Nicola’s ‘Budget for the times”

Budget 2026 is a tight plan that sees small funding increases for infrastructure, health, defence, and education that largely come from savings secured from other areas.

Finance Minister Nicola Willis says Budget 2026 is a responsible Budget that boosts funding for essential services and invests in the infrastructure New Zealand needs for the future without breaking the bank.

“At a time when many New Zealand families and businesses are still under pressure from higher living costs and global uncertainty, this Budget takes careful steps to support New Zealanders now while strengthening the economy for the years ahead.

“It will ensure New Zealanders can look forward to more jobs, higher incomes, stronger public services and a more affordable and secure country.”

Treasury is forecasting the economy will grow by an average of 2.7 per cent over the next four years, with the Government's books returning to a surplus a year earlier than expected - in 2028/29. 

However, Treasury also warns of continued uncertainty caused by global situations, particularly the impact of the war with Iran and the Strait of Hormuz. It also warned that commitments to the Paris climate accord will be charged soon as New Zealand is predicted to fail to meet emissions targets.

Prime Minister Christopher Luxon says Budget 2026 demonstrates the economic and fiscal discipline needed to steer New Zealand through an uncertain global environment and into a brighter, more secure future.

“Against a challenging global backdrop, we are staying the course on responsible fiscal repair while supporting economic growth to create jobs and lift wages,” Mr Luxon says. He cited $50 billion of savings over three Budgets as ensuring the country was ready for the future.

He says the global fuel crisis has affected most households and businesses. While the challenges remain, the positive outlook shows the Government’s economic programme is helping ensure New Zealand is well-positioned for the future. 

“At a time when many Kiwis are making careful choices with their budgets, the Government must do the same. New Zealand cannot tax, borrow and spend its way out of every challenge.

“Budget 2026 is all part of our plan to fix the basics and build the future, to create a more secure future for all Kiwis no matter what the global environment brings.”

However, the Opposition said National had failed voters.

Labour’s finance spokeswoman Barbara Edmonds says that under National’s watch, unemployment has grown and economic growth has stalled. She said the Government was holding the country back.

“This Budget was the Government’s last chance to help those doing it toughest, and they have failed.”

Greens’ Chloe Swarbrick says the Government has no intention to meet the $23b of Paris agreement commitments owing by 2030.

"New Zealanders deserve a Government honest enough to show them a plan that tackles the hard things, and shows how they’ll deal with it. Luxon has decided to leave our country, and our people, without.”

Health and education get the biggest boosts. $5.5 billion, over the next 4 years, has been allocated to "maintain current health policy settings". $2.1b extra has been allocated to education over the next four years.

The Government has allocated $292m over four years to support the proposed new resource management systems that new legislation will introduce later this year. 

As well, councils will get $400m over four years in incentive payments for consenting new homes. For each new home consented up to a limit of 1% of a council’s existing dwellings, councils will receive a payment worth 0.25% of the national average consent value. For consents between 1-2% of existing dwellings, councils will get a payment worth 0.5% of the national average consent value. This payment rises to 1.25% for consents beyond 2% of existing dwellings.

The policy replaces a coalition commitment to share a portion of GST collected on developments with councils.

Also announced were a levy on banks, non-bank deposit takers, insurers and other financial market participants to help cover the costs of the Reserve Bank, which is their regulator, to raise $209m.

The Government will change donation rules to limit claims to $100,000, expected to raise $52.6m over four years, and also changed rules to tax loans that are made by companies to shareholders that remain outstanding six months after the company is removed from the companies register. This removes a $146m loophole that allowed shareholders to reduce their tax liability through these loans. 

The Government is to change foreign investment fund rules to benefit people who invest in overseas stocks, lifting the de minimus threshold to $100,000 from $50,000. This will have the effect of reducing the tax people pay on stocks they hold offshore, costing $72.5m.

Transport sees almost $1.8b funding for the next stage of the Waikato Expressway - a Road of National Significance.  As well, $400 million more is committed to improving vulnerable state highways’ resilience, and more than $1 billion has been committed to support Kiwirail's planned network upgrades.

The Government has set aside $450m to deal with potential fuel crisis developments, and some agencies are getting more

month so they can still deliver services despite high fuel prices. 

There will also be an investment in Genesis Energy to accelerate investment in new generation and firming capacity. Corrections gets $487 million more to cope with growing prison populations, including more frontline staff, and Police get nearly $400 million over four years, including $50 million for frontline service delivery.

Already announced:

• cuts to the size of the public service, reducing it by about 1 per cent or 8700 jobs, in order to save $2.4 billion over four years.

• increases in social housing rents;

• $35million to ambulance services over four years;

• cancelling the fees free year for tertiary students, saving $1b;

• $15.5m, over the forecast period, was for extending specialist paediatric palliative care, and there was a $1.37 billion per annum increase to Health NZ’s baseline funding.

• There would be a $180m boost to healthcare in the Otago Central Lakes area, with $128m in new operating funding over four years from July 2027, and another $52m in capital funding.

• $70.7m over four years to Customs, for cargo X-ray equipment, strengthening the security of Customs facilities and Customs Controlled Areas in ports and airports, new defensive equipment and enhanced training for staff, and increased capacity to store and manage seized illicit goods.

• Defence’s Maritime Fleet Renewal programme gets more than $1.5b into military drone systems, critical ship maintenance, and naval upgrades to strengthen the country's maritime security.

• An extra $79m over the next years to boost wilding pines control work.

Read the full Budget 2026 here