A (largely) unpromising Fiscal Budget 2026

Minister of Finance Nicola Willis said prior to delivering the Fiscal Budget 2026 that she was not going to pull any rabbits out of the fiscal hat.

For the very most part, she was as good as her word. With a few notable exceptions, the last budget before the 2026 General Election is held, was quite predictable.

So, what were the notable exceptions?

First and foremost, we need to talk about the new tax that will be placed on all banks to fund the work that the Reserve Bank does. This was completely unexpected by the Government, albeit very welcome as the Reserve Bank does need to be brought into line with best international practice. A welcome first step that will hopefully be carried by the next Government.

Second, after years of neglect – and perhaps encouraged by the war against Iran – $3 billion has been allocated for defence spending. It will include critical upgrades needed by the frigates, H.M.N.Z.S. Te Mana and Te Kaha, multi-role vessel H.M.N.Z.S. Canterbury. It also invests in drones and critical maintenance.

Third, $153.6 million will be invested in improving cyber security of Ministry of Health programmes and systems. This is quite an important announcement as I have no recollection of the previous Government doing anything to improve security of the data of some of New Zealand’s most vulnerable citizens. I also recall the large scale hacks and failures in the 2010’s of multiple agencies where (tens of) thousands of people had their data breached by outside interests. I further recall there being less than robust responses by the then Ministers responsible for those entities.

Fourth, Minister of Rail, Winston Peters managed to secure $1.075 billion funding for railways. No mention though has been made of the South Island where many people have the perception of Kiwi Rail being “North Island Rail”. If correct, it continues a long term trend of the South Island not being considered by Kiwi Rail as part of the wider network.

These announcements aside though, it was not a promising budget in many respects. It comes against a backdrop of budget cuts to nearly all departments and Ministries of the Crown. It comes against buts to support for the public service, female renumeration equity and programmes to support our tangata whenua.

But there was one more, completely unexpected, yet welcome announcement.

Fifth, a $79 million announcement of funding to fight the invasive pinus contorta (wilding pine) infestation that has been in progress for decades was made. More impressively, it came from Minister of Biosecurity, Andrew Hoggard (A.C.T.), who was completely remiss during the hornet outbreak in the North Island.

It comes against the recently announced decision to slash 8,700 jobs across various departments. I assume it is being used to fund those few projects lucky enough to get additional funding on Thursday.

I rate this Budget a C. It had a couple of useful items that were not expected. The Budget finally delivered on some long term defence priorities that had been forecast for years. It has a useful tax – which I am quite sure was watered down by A.C.T. and New Zealand First – on bank profits, which will claw back a bit of income to fund work by the Reserve Bank.
But it was missing for a lot of things – for the environment, social welfare, the police, South Island initiatives and so much more.

But for the expenditure announced above, you can be sure that the Fiscal Budget 2026 would have gotten a much lower mark.