Source: New Zealand Government
[Keynote delivered at the New Zealand Economic Forum, 12 February 2026]
Tēnā koutou katoa, and good morning.
Thank you to Professor Jennifer Kerr and the University of Waikato Management School for hosting us.
It is great to be here in the Waikato – a region that is building capability for the future, from innovation in agritech, to world-class events in the new BNZ Theatre, and soon to producing much-needed doctors and medical research through the new Medical School.
To my parliamentary colleagues, mayors, representatives of local government, members of the diplomatic corps, business leaders, economists, academics, students, and guests from across New Zealand – thank you for being here.
It is a privilege to open the 2026 New Zealand Economic Forum.
The theme of this year’s forum is Big Choices for a Small Nation. And there is one choice I want to be clear about at the outset.
We are fixing the basics and building the future by choosing smart investments that increase performance and decrease debt.
New Zealand does not grow by taxing more and investing less, and our Government is choosing a better course.
We grow by backing ambition, cutting red tape, and rewarding success.
That is the choice this Government is making.
We are meeting at a time when that choice matters.
The global environment is unsettled. Markets are volatile. Geopolitical risks are rising. Climate events are increasing. And the economic recovery has taken time, with real pressure on hardworking Kiwis.
In moments like this, it can be tempting to drift, or to reach for higher spending as an easy answer. But after the last Government more than doubled debt to 41.8 per cent of GDP, New Zealanders know the cost of that band-aid approach – it is simply not sustainable.
Small, open economies succeed by making deliberate choices.
History shows New Zealand’s biggest gains have come from disciplined decisions at home – managing the public finances responsibly, backing investment, staying open to the world, and building institutions that support long-term growth.
That is what this Government is focused on.
This morning I want to set out three things:
- how we are managing the public finances and restate the case for why fiscal credibility matters;
- how New Zealand is positioning itself in a more volatile global environment; and
- how we are strengthening the foundations of growth – by backing ownership, investment, and productivity through a wide-ranging reform agenda.
This is about backing New Zealanders with settings that reward effort.
When we make the right choices, there is no reason New Zealand cannot grow faster, lift incomes, and build resilience – not despite our size, but because of it.
1. Fiscal positioning and economic leadership
Let me begin with the fiscal context.
New Zealand has been through a long and difficult economic adjustment. The post-Covid period brought inflation that lingered too long, interest rates that hurt too many households, and a downturn that took time to unwind.
The most recent Treasury forecasts show the economy has begun to turn a corner. Growth strengthened through the second half of last year, unemployment is stabilising, and confidence is returning. Momentum is building – but sustaining it requires discipline and focus.
At the same time, the Crown’s balance sheet remains under pressure.
Core Crown expenses are still elevated relative to pre-pandemic levels. Debt-servicing costs are significantly higher than they were five years ago. Demographic pressures, particularly in health and superannuation, continue to intensify.
That context explains the fiscal strategy we are pursuing.
Our objectives are clear and worth restating:
- to return the operating balance to surplus by 2028/29;
- to place net core Crown debt on a downward track toward 40 per cent of GDP; and
- to rebuild fiscal resilience so future governments have options when the next shock inevitably arrives.
Those are not arbitrary numbers. They reflect the hard-won credibility New Zealand has built internationally over decades. They underpin our sovereign credit ratings. They protect households from higher interest rates. And they preserve room for governments to respond when crises occur.
They are targets easily forgotten by politicians who wish to spend more in election campaigns. But if we forget those targets, New Zealand’s economic strength will be impugned. And my view here is that fiscal credibility is not ideological. It is practical – and it is essential.
That is why Budget 2026’s operating allowance is $2.4 billion per annum. This is a ceiling, not a floor. Every dollar must be justified. Every new initiative must come with a clear case for value.
Over the past two years, this Government has made decisions delivering around $11 billion a year in savings and revenue measures. Those decisions were not easy. But they have stabilised the public finances, protected frontline services, and enabled investment in long-term growth.
That approach of delivering savings will be continuing in this budget and every future budget I deliver. Fiscal discipline is not the end goal. It is, in fact, the foundation for everything else we wish to achieve, because without it, everything else – growth, investment, resilience – becomes harder.
2. New Zealand’s position in a volatile world
We are making these choices in a world that is more uncertain than at any point in recent decades.
Geopolitical competition is sharper. Supply chains are more fragile. Energy markets remain volatile. And technological change – from artificial intelligence to advanced manufacturing – is accelerating faster than policy systems typically adapt.
Yet New Zealand’s position in this environment is stronger than we sometimes allow ourselves to believe.
We are politically stable in an unstable world. We have strong institutions, high-quality regulation, low corruption, and an independent central bank.
We produce food, fibre and energy the world genuinely needs. And we continue to generate globally competitive firms across agritech, software, advanced manufacturing and aerospace.
Our challenge is not a lack of potential.
It is whether our policy settings organise that potential, or suppress it through uncertainty, cost, and delay.
Much of what matters for New Zealand’s prosperity remains within our control: predictable policy, efficient infrastructure, credible fiscal management, secure energy supply, and settings that reward ownership and investment.
Resilience is not just about surviving shocks. It is about having the capacity to adapt, recover, and sustain growth.
3. Ownership, investment and productivity: backing growth
This global context brings us directly to the choices we are making at home to back growth
For decades, New Zealand’s productivity growth has lagged behind comparable economies, and the consequences are clear, lower wages, less fiscal headroom for investment in public services, from medicines through to classrooms, fewer globally scaled firms, and in my view, too much reliance on population growth and house price growth rather than genuine productivity gains.
And so, the task that our Government faces is not simply to repair the basics which were damaged post Covid, but to build foundations in our economy that allow us to address these long-standing productivity challenges.
Our Going for Growth agenda, which I published at last year’s forum, is grounded in a simple proposition: productivity responds to incentives. Productivity is not resolved through one silver bullet, but ongoing, substantive, systemic reform.
When people are confident, they own assets, invest in capital, and earn a return without those settings being constantly reopened, they invest more – and they invest earlier.
That is why this Government is explicitly backing ownership, investment, and productivity-enhancing settings.
Not through subsidies or short-term stimulus.
But through durable policy settings that reward productive activity.
The Investment Boost tax policy introduced in Budget 2025 was designed to do just that – change investment behaviour in favour of more capital intensity in our firms.
And it would have been easy to say at the last budget, we can’t afford a productivity-enhancing tax measure at this point, because that will require us to make difficult savings elsewhere. But the choice we made is that we can’t afford not to. We can’t afford to keep waiting to make productivity enhancing changes to our tax system.
And so, Investment Boost is not about rewarding investment that would have happened anyway. It is about tipping decisions – bringing investment forward, increasing scale, and anchoring capital in New Zealand.
And we are already seeing that happen.
Early evidence from Inland Revenue shows that among firms that invested recently, 40 per cent say Investment Boost increased their investment spending over the past year, including 11 per cent reporting a significant increase directly because of the policy.
Looking ahead, the impact is even clearer. Nearly half – 49 per cent – of firms intending to invest over the next five years say Investment Boost is positively influencing those plans, with 14 per cent anticipating a large increase in investment as a result.
What matters is not just that businesses are investing more, but how they are investing.
More than half of firms report adjusting the timing, scale and type of investment. Projects are being brought forward. Capital is being prioritised into productivity-enhancing assets. And businesses are choosing to own capital rather than lease it.
We can see that on the ground.
Dunedin-based United Machinists has brought forward investment in robotics and automation, rather than phasing it over several years.
Foot Science International has accelerated investment in automation and renewable energy infrastructure.
Christchurch-based Vynco is investing in advanced manufacturing equipment that will lift efficiency and expand capacity.
These are not abstract policy effects.
They are real businesses making real decisions – earlier, larger, and more productively – because the incentives have changed.
That matters, because capital deepening is how productivity rises. And productivity growth is how wages grow sustainably over time.
But there is a broader issue that needs to be confronted.
Investment Boost only works in the longer term if businesses believe it will endure.
Firms do not invest in long-lived capital – plant, machinery, buildings – if they think the rules may change after the next election.
So, my question to Mr Hipkins is straightforward.
Will they commit to retaining Investment Boost as a permanent fixture of our tax settings to unlock growth or will it be sacrificed to fund higher spending and new taxes?
This Government’s position is clear.
We back ownership.
We back investment.
And we back productivity-enhancing tax settings.
Policy stability, long-term reform and the growth opportunity
I want to make a broader point about policy stability, because this is where long-term growth is won or lost.
Business investment decisions depend on confidence: confidence in the regulatory environment, confidence in the tax system, and confidence that major settings will not be reopened or rewritten after every election.
There is strong evidence, here and overseas, that uncertainty around tax policy has a chilling effect on investment. When businesses hear ongoing debate about capital gains taxes, wealth taxes, inheritance taxes, or new taxes on investment and savings, they delay decisions, reduce scale, or take capital elsewhere.
That uncertainty is not theoretical. It has been lived.
This Government is taking a different approach.
We are committed to stability where stability supports growth. Not because change is never needed, but because constant churn comes at a real economic cost.
Good economic policy is not about novelty or relitigating the same arguments every three years.
It is about credibility, consistency, and giving people the confidence to invest, train, and build for the long term.
That principle runs through our broader reform programme.
If we step back, the question is not just what grows the economy this year, but what kind of economy New Zealand becomes over the next 10 to 20 years.
We have emerging sectors with enormous potential. From agritech and advanced manufacturing to digital services, biotech, clean energy and critical minerals. Unlocking that potential requires more than one-off incentives. It requires long-term settings that endure across economic cycles.
That is why we are backing reforms that strengthen both the economic and human foundations of growth.
Our reform agenda is not Band Aid solutions or quick fixes, but systemic changes, from competition reform to procurement reform to real transformation of the public sector and its delivery of services, digitising public services, enabling housing growth through investing in new funding and financing tools in competitive land markets, infrastructure funding and financing and planning.
This real reform doesn’t happen overnight, but it is essential, and in too many cases, overturned. Today, I want to focus on just three key areas where that reform agenda is significant.
The first is education. Here we are lifting performance by fixing the basics, because productivity ultimately depends on skills.
That is why we are:
- refocusing the system on core skills
- strengthening curriculum clarity
- investing in structured literacy and numeracy,
- and beginning the work to replace NCEA with a more credible, coherent qualification
These reforms are essential to give New Zealanders the skills to succeed, and give employers confidence in the workforce they are investing in. And no one will argue with the fact that achievement of those who are undergoing structured literacy has increased significantly.
According to our studies that doesn’t just mean that productivity growth, or GDP, will be increased in the next quarter, but that achieving better skills for our students is essential to our 20-year productivity goals.
The second area where we are strengthening ownership and long-term savings is through our policy to increase KiwiSaver contributions over time.
As Finance Minister, we made that commitment in last year’s Budget, and KiwiSaver default contributions will now increase half a per cent from this year and rise again in two years.
As National Party’s finance spokesperson, I’ve been proud to announce our policy of increasing KiwiSaver contributions beyond that over time – lifting domestic capital, strengthening household resilience, and supporting investment in New Zealand businesses.
And the third area is our reforms to the planning system, because growth cannot happen if building is blocked.
Replacing the Resource Management Act is one of the most important economic reforms underway. The two new Bills Chris Bishop has put forward fundamentally rebalance the system by:
- reducing unnecessary delay
- clarifying decision-making pathways
- improving certainty for investors
- enabling nationally significant infrastructure to proceed, and making growth easier rather than harder
If we are serious about lifting productivity, we cannot continue with a system that makes it harder to build than to object.
And we are making strategic investments in human capital that will strengthen our workforce and our economy for decades. That includes expanding medical education right here with the University of Waikato Medical School.
From 2028, the Waikato Medical School will train an additional 120 doctors each year, focused on primary care and community health, helping reduce reliance on overseas workforce and improving access to timely care for families, especially in rural and provincial areas.
This is a long-term investment in people – building the pipeline of doctors we need, creating new jobs, and strengthening the health workforce across this region and the country. And significantly, is occurring not just with Government funding, but with the contribution of the university and philanthropy as well.
We are also already seeing what disciplined reform can deliver.
A year into Kāinga Ora’s Turnaround Plan, performance is improving while debt is being brought under control. When this Government came into office, Kāinga Ora’s debt had grown from $2.3 billion to $16.5 billion, with forecasts showing it heading toward almost $25 billion. Clear direction and tighter discipline have changed that trajectory. Operating costs have been cut by $211 million in a single year, and peak debt has been reduced by $9.5 billion, now expected to top out much lower.
Importantly, this has occurred while outcomes have improved. Build costs are falling, renewals are accelerating, rent arrears are down by nearly 3000 households, and tenancy satisfaction has risen to 87 percent. It is a practical example of what happens when government focuses on accountability, value for money, and delivery – lifting performance, while reducing debt.
Taken together, these reforms share a common purpose.
They back ownership.
They reward investment.
They lift productivity.
And they provide the policy consistency New Zealand needs to grow with confidence over the long term.
That is what economic leadership looks like, and it is the platform on which sustainable growth is built.
Closing reflection
Let me finish where I began – with choices.
New Zealand’s future will be shaped by whether we back the people who invest, build, and create opportunity, or burden them with uncertainty and cost.
This Government has made its choice.
We are backing ownership.
We are backing investment.
We are backing productivity.
We are fixing the basics and building the future.
Others may argue for higher taxes and more spending.
But every one of those choices comes with a price – and that price is paid by hard working Kiwis.
If we make disciplined choices grounded in the simple belief: that New Zealand succeeds when people have confidence in the future, clear rules to operate within, and the freedom to invest and grow.
Then New Zealand’s future is not something to be cautious about,
It is something to be confident in — and something to build.
Thank you.
