What Nicola Willis is banking on in Budget 2026 | The Front Page

Added: 2026-05-31

[00:00:03][music] Koda. I'm Chelsea Daniels and this is the front page, a daily podcast presented by the New Zealand Herald.

[00:00:16]Infrastructure and health are the big priorities in this year's budget as banks face new levies and cuts take shape. There are no specific cost of living payments or budget sugar hits, but Finance Minister Nicola Willis promises spending initiatives will create thousands of jobs. And our books are set to return to surplus earlier than expected. But opposition parties are saying the government doesn't live in the same reality as struggling Kiwis.

[00:00:46]So what does it all actually mean for households, for the economy, and for the political landscape? Today on the front page, NZ Herald chief political reporter Jamie Ensor is with us to break down the numbers, the politics, and what it all means for you.

[00:01:04][music] So Jamie, very few surprises in budget 2026, but that doesn't really come as any surprise, I guess, does it?

[00:01:13]>> No, not really. The government has done a pretty good job of expectation management with this budget. you know, they don't want the public primes for any handouts or a lolly scramble if they know that they can't deliver on it. Uh, you know, finance ministers going into a budget will often say to the public, don't expect too much, that the government's going to be responsible with taxpayer money. I mean, that there isn't room for any splashing of the cash. And, you know, political journalists in the public have become quite skeptical of that. We're used to going into a budget and then finding out there's this new handout, there's this new subsidy. uh and in this instance um there wasn't that and so I think Nicola Willis did a good job of laying the groundwork for that uh in the days before the budget.

[00:01:54]>> What's the core story of this budget? I mean, if we were to give it a fancy name or something like we do love doing, what do you reckon we'd call it?

[00:02:02]>> Well, there's a few names swirling around this place. You know, some people have called it the boring budget, some others have called it the broccoli budget because it's kind of something that we need, but people don't rush to go and go and get. I think there's probably a case for calling it the brave budget. You know, you have to be politically brave in an election year during a fuel crisis not to do something like a cost of living uh subsidy or or relief payment. You have to be brave to do big public sector reforms like they're doing to the public service uh like the reforms that they're doing to the social housing that are going to have inevitable backlash. but sticking to your convictions and showing that you have a vision for what you want to achieve and and fully going for it. So, I think Nicola Willis has been has been politically brave. The the opposition has said that she's done little to relieve the pressure on the public and that's probably true. Uh but Nicola Willis would make the argument that, you know, by being financially responsible, you aren't creating uh inflation for the future. So, it's more of a, you know, short-term pain, long-term gains sort of thing.

[00:03:08]>> I suppose health is the biggest spend in this year's budget. Hey, but isn't it usually?

[00:03:14]>> Yeah. I mean, health is one of the biggest expenses for the government behind social security and welfare. So, help always needs to be getting a top up just to essentially stand still. You have to give it more money just to keep the lights on. So, uh, having, you know, the additional money in in this budget, uh, isn't unexpected. Uh, the health spending over the last 3 years has been kind of in this multi-year package. Uh, so a lot of the spending or the money that we heard about yesterday in the budget is is stuff that's already been previously discussed. So, the government can essentially double dip and look like it's spending new money or announce something new when actually it's previously spoken about that funding.

[00:03:53]But there were some quite interesting targeted initiatives in the health space this year. Uh they are doing some stuff with post-natal. Uh that means that uh newborn new mothers can stay in birthing units for up to 3 days if they wish.

[00:04:07]That's probably going to be quite popular. They're lowering the bowel screening age. Again, something that most people probably aren't going to oppose. So yeah, we always hear about new new health spending. Um, but I think the government's hit the right note in finding some very specific initiatives that's going to go down well with the public.

[00:04:25]>> Yeah, I was listening to Heather Tissy Allen Drive on ZB last night and she said schools, hospitals, wo motorists, and Winston Peters were the big winners.

[00:04:35]Uh, I've seen a lot of commentary about Peters getting a lot in this budget.

[00:04:38]What's all that about?

[00:04:40]>> Well, I mean Winston Peters has been part of the B budget process for many, many years before. He's pretty adept at it at this stage and he's done a very good job at kind of carving out his own little areas or or little niches that he can really look after and get good results for in the budget. So, you know, for example, foreign affairs that was exempt from the baseline savings exercise this year, the the 2% cuts. So, he can show that as an achievement. He got about a billion dollars uh for rail.

[00:05:10]We don't really have a lot of detail on where that billion dollars is going uh to other than just general network improvements. So yeah, Winston is is very good at finding things that he can take ownership of that he can really champion and he's done it once again in this budget.

[00:05:27]>> Yeah. Speaking of is there anything in I noticed that Shane Jones was kind of fronting on all things budget instead of Peters. I mean is there anything in that?

[00:05:35]>> Well Shane Jones is an associate finance minister. So, you know, finance ministers want to make a big show of what they've achieved for their parties on on budget day. I mean, it just happens to be that, you know, David Seymour, another associate finance minister, is the leader of the ACT party. So, naturally, he was going to speak. Uh, but I think Winston probably also is um very much thinking forward to the election. He over the last few months continues to say that yes, decisions might be being made by the government today, but things could change after November the 7th. So he might be creating a bit of distance in order to be able to um distance himself from the government of today so he can campaign for u for November 7th um and try and show what New Zealand first would be doing differently.

[00:06:19]>> Yeah, I was thinking that myself actually. It might have just been him distancing himself from the eyes of the voter. And that's the whole reason why we reckon that he took the deputy prime ministership in the first uh half of the term rather than the second cuz he can just focus full ball on the election campaign. I suppose on the other hand, Nicola Willis uh has described superanuation as a time bomb uh that is here now and political parties need to be honest about it. Willis said the superanuation bill for the country will increase by $1.8 billion next year, which is almost as big as her entire operating allowance in this budget. It's going to cost about $30 billion a year.

[00:06:58]By 2030, it's gone up $10 billion in this last 7 years. Do what do you make of the swipes I suppose that she made at New Zealand first when discussing super?

[00:07:09]Well, >> I think the politics works for both sides. It works for national, works for New Zealand first. For Nicola Willis, she's able to show that she is thinking about the finances in a responsible way.

[00:07:18]She's setting out what, you know, the hard choices that need to be considered in order to look after future generations. And there will be a lot of people who respect her for that for for that braveness as I was speaking about earlier. For Winston Peters, you know, this plays into his hands, looking after super, looking after the seniors, that's very much his bread and butter. So I think you know even though it may look like they are kind of taking swipes at each other and they they are um it does work for both sides to be in kind of in that battle and have have that tension.

[00:07:49]I think Nicola Willis will also say that, you know, she sees this as genuinely the right thing to do and even if she can't get it across this line um within this government or in the next government, if she's still working with Winston Peters, she will feel like she is laying the groundwork, setting out the argument for why there needs to be change. And if one day she is governing without Winston Peters or someone else is governing without Winston Peters, she will feel like she has set them up to make this change.

[00:08:24]We believe what we say, which is the way for Kiwis to get ahead, is for us to strengthen this economy so that there are more jobs, so that wages can lift, so that actually inflation is under control, and so that the government's managing its books to invest in the public services that Kiwis really rely on. That's who we are. That's what we are. Uh, so I won't be getting pulled into some election bribery game because New Zealand experienced that in the past and it left us in a very big debt hole.

[00:08:49]It was an economy that was very damaged.

[00:08:53]>> Does this give us a glimpse into the campaign trail? I know things haven't officially kicked off yet, but do you see superanuation as being one of those real big ticket items?

[00:09:03]>> Yeah, it could be. It's it's one of those policy issues where there's quite a clear difference between between national and New Zealand first. Uh you know the Labour Party hasn't put out their policy on super but they have made it pretty clear that they don't want [music] to make any any changes um like national uh is proposing or suggesting that they will campaign on. So it is it is an issue that there is a a clear differentiation between the parties and that means it is something that um will be interesting to see how they um oppose each other or attack each other uh during the election campaign. But you know super um the the the parties are going to have to make an argument u to the voters about why they should care about super right now. You know people were focused on their immediate needs on their needs right now with the cost of living. Uh, so whether the voter turns their minds to to the super argument is probably a different question.

[00:09:53]>> What's all this about reaching surplus?

[00:09:56]Yay, we have, we're going to do it, but it's because we've changed the goalposts kind of situation.

[00:10:01]>> Yeah. So, the government has a has a traditional measure. Um, it's called a beagle. Um, I won't go into the exact details of it, but that's how they they determine whether the country's books are in a surplus or a deficit. Um when this government came into power they made a few little tiny changes or one key change they removed ACC from it and they called it OGO X essentially on that new measure on the the finance minister's preferred measure they are going to get to surplus a year earlier than we had thought going into the budget. Um and she's able to crow about that. she's able to say that, you know, despite these difficult economic times with the the conflict in the Middle East, the government is still finding a way to to improve the books and get back into black. But, uh, that that surplus is, you know, it's it's kind of it's very dependent on what goes on in the world over the next the next couple of years, whether Donald Trump does does more things, goes into the Middle East further create any more conflict that has ripple effects for our economy. uh the the Labor Party is saying that some of the savings the government has identified are are really flimsy and if if those don't eventuate that's going to have impact on the overall state of the books. So we'll have to wait and see whether we actually do reach surplus within that time frame. But as we know so many things can happen and that the whole political context the whole uh geopolitical context could change.

[00:11:26]>> I saw that consumer NZET has warned that the new finance sector levy could raise costs for customers. So, the revenue is from this new levy. It'll be 1% of the total profits of the big four banks alone, raising $29 million over the next four years. But it it could have been actually more. Hey, >> it could have been. It sounds like Nicola Willis wanted it to be. Uh, but she got blocked here by David Seymour.

[00:11:52]It appears Nicola Wil has been looking at bank tax settings for over the last the last year and she's been trying to formulate or come up with a a specific proposal for this budget. She's highlighted that she looked at various different options and that a option that could have actually brought in more revenue was was stopped at the coalition table. This this bank levy as you say is only going to be less than 1% of the total profits of the four big banks. So, you know, people will say, "Why didn't you go further?" Nicola Willis will probably go out on the election campaign and say, "Hey, I'm willing to go after the Mags Moore." And it was David Seymour who stopped me. And David Seymour made that same argument yesterday that the costs of this levy are going to be borne by the customer.

[00:12:38]He says it's just going to flow on through, that banks only get their overall revenue from customers. In response to that, Nicola Willis sent a fairly strong direction uh to the big bank saying, "Hey, don't pass this on to the customers. You guys make a lot of profit. You can easily manage this.

[00:12:57]Don't go after Kiwi's back pocket."

[00:13:05]It was their last chance to show New Zealanders that they get it, that they feel the pain that New Zealanders are under, and they have failed to do that.

[00:13:14]Kiwi families will be asking themselves one question after this budget. Are they feeling better off today than they were 3 years ago? And for the vast bulk of New Zealand families, the answer to that is categorically no.

[00:13:33][music] >> Meanwhile, I suppose we should start talking about the opposition and their thoughts on the budget. Um, Labour is still on the we're going to crunch the numbers carefully and I'm not going to make any promises that I can't keep stickick. Um, Hipkins is still not saying what he wants to keep or cut. He said some policy will be ready for June.

[00:13:52]Uh, they've got to, you know, finalize some numbers. Uh, but it'll be, and I quote, the next couple of months about how we'll approach the budget differently.

[00:14:02]A couple of months. Do you reckon that's good enough at this this stage in the game? Well, I think we will see the Labour Party roll out individual policies probably in the next couple of weeks and then slowly over a couple of months. I don't think we're going to see, you know, a full fiscal plan, a full idea over of the overall um, you know, desires for spending or debt or or a surplus or a deficit. We won't see that until closer to the election. And that's that's entirely justifiable. you know, the party can't put out a full fiscal plan explaining how they're going to pay for everything until they announce all the policies that are going to be within that fiscal plan. So, that that's understandable. There are two schools of thought in terms of whether they should have come out of the budget yesterday and committed to more things or said they're going to reverse more things. If you think back to 2023, that's when National was in opposition.

[00:14:54]They came out of that budget and they said that hey we're going to reverse the prescription fees uh policy that the government of the time the Labor government had announced in that budget.

[00:15:04]So they made a really quick commitment on that. So it shows that it can be done. On the other hand Labor wants to present itself as being you know responsible going over those numbers looking at things line by line and taking their time with it so they don't make any promises they can't keep. And that seems to be, you know, what Labor is suggesting that they they're going to do over the next couple of weeks before they announce any new policy.

[00:15:26]>> Yeah. Because they really are in between a rock and a hard place when it comes to this. Hey, cuz there is no money. There is no, you know, money to do anything in there. It's a sugar-free budget and it's going to be pretty difficult to kind of hand out, you know, different concessions and make it anything more than a boring broccoli budget at this stage. you've either got, you know, to to find money from from anywhere, you know, reach down at the back of the couch kind of thing, or in an election year, try and convince Kiwis that debt isn't bad. Uh, so what what way do you reckon they're going to go with this?

[00:16:02]>> Yeah, Labor has made a a number of, I guess, big uh big picture promises, even if they aren't specific policies.

[00:16:09]They've talked about reversing some of the government's changes in terms of pay equity. In terms of the government's numbers, that comes with a $12.8 billion price tag. Now, Labor is disputing that to some some degree, but Labor is going to have to explain how they're going to pay for that sort of thing. And inevitably, that's going to lead to a discussion of whether they're willing to borrow more money, whether they're going to introduce some new revenue measure.

[00:16:31]They've said they're not going to other than a capital gains tax, but [clears throat] the capital gains tax only brings in enough money for their three free doctor's visits. So, it is a bit of a tangle that the Labour Party is going to have to unwind over the next few weeks. They've got a whole bunch of other kind of general commitments that they've made to their to their voter base, to the unions, to their stakeholders, and they aren't probably going to be able to meet every single one. So, they're going to have to explain to those people why they are choosing one thing over another.

[00:17:01]>> And what are the other opposition parties saying, Jamie? I I can't imagine that the Greens are very happy with this with this budget.

[00:17:09]>> No, the Green Party has uh identified some issues in terms of the the climate liabilities that the government will potentially have down down the road. to party moldi has argued that there isn't enough uh in this budget specifically for moldi though there has been a few individual moldi related announcements uh to do with broadcasting witho the government's whole argument or I guess counter to that would be that you know all New Zealanders including moldi benefit from you know a new hospital new roads uh by ensuring that inflation doesn't get out of control uh so yeah know there has been natural opposition uh from the greens and partying moldi to this budget it. We'll have to wait and see, I guess, how much they can get cut through with their their arguments cuz all the attention is now turning to the Labor party in terms of what they're going to do in terms of policy. But we of course have to remember that, you know, if Labour wants to govern, they're most likely going to have to rely on forming some sort of agreement with the Greens and Party Moldi. So, of course, it's all interlin.

[00:18:09]>> Thanks so much for joining us, Jamie.

[00:18:10]>> Thanks, Chelsea.

[00:18:14]>> [music] >> That's it for this episode of The Front Page. You can read more about today's stories and extensive [music] news coverage at nherald.co.nz.

[00:18:24]The front page is hosted and produced by me, Chelsea Daniels. Kane Dicki is our studio [music] operator. Richard Martin, our producer and editor, and our executive producer is Jane [music] Ye.

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