Source: New Zealand Government
Ka nui te mihi kia koutou, and good afternoon, everyone.
Today has been officially billed as a pre-Budget speech and I’ll touch on the Budget, and our priorities this year, a little later on.
But, in a more volatile world, and off the back of a recent trip to Singapore, I’d like to take the opportunity to speak to you today on a bigger, broader topic, both in my capacity as Prime Minister and as National Party leader.
I’d like to speak to you today about where New Zealand stands in a more volatile world – a world that’s changing quickly and becoming less predictable, and how we need to adapt and secure our country’s future.
The Indo-Pacific is the most economically dynamic region on earth. It will generate two-thirds of global economic growth in the coming years. By 2030, two-thirds of the world’s middle class will live here.
But there’s another side to this. Something important has changed in how global power works, and we need to be honest about what we see.
Put simply, our world is facing three big changes.
First, we are moving from a world ordered by rules to one ordered by power. Countries are shifting from working together under international law to more transactional relationships without shared rules. In this setting, stronger nations do as they please, and smaller countries have to adjust.
Second, international relations are moving from an economic focus to one dominated by security concerns. Competition now means cyber-attacks, disinformation, supply chain coercion, and grey-zone operations are primary tools of statecraft.
Third, we are moving away from a world that valued efficiency, like lean supply chains and borderless capital, to one that now puts national resilience first.
The examples are obvious to us all.
The United States, which supported the global order for 80 years, is now focusing more exclusively on its own view of its own interests. America First.
Russia has made its brutal intentions clear in Europe, reminding the continent that territorial conquest is not a relic of history.
And China is assertively expanding its influence across the Indo-Pacific and beyond.
A world where hard national interests are being pursued by hard national power. An unsentimental world.
A world where many of the rules that have helped keep us safe and prosperous are contested and sometimes ignored.
And a world where centres of power are ever more distributed, and where countries in the Global South, including Africa, Latin America, Southeast Asia and our own Pacific neighbourhood, are also no longer willing to remain passive in a system they did not help design. Their desire for a greater say in global affairs is justified.
This is the world New Zealand must now navigate – not with fear, but with clear eyes and a willingness to make different choices than in the past.
We are living through an inflection point in history and for now a new multipolar international system appears to be emerging, although the outcome is not yet fully determined.
As a small nation without the means to assert ourselves diplomatically or economically, New Zealand has benefited hugely from the system of rules that has been built up through the multilateral system.
We helped build it and we have a long record of continuing to invest in its development. Our values, trade and security all depend on that foundation. And alongside our friends and partners, we must keep working to protect it and remake it.
When you turn on the news at night and see alliances straining, trade wars flaring and the rules being rewritten by the powerful, it is only natural to feel as though the ground is shifting beneath you.
It can seem as though the world you or your parents knew is becoming unfamiliar, harder to interpret, and beyond your control.
I hear these concerns and I feel them too. And I want to be honest with you about this, instead of giving empty reassurances.
But let me also stress this: we have faced similar challenges before, and we have overcome them.
Consider for a moment the New Zealanders who came before us.
The generation that lived through the First World War witnessed a world they believed to be civilised fall into chaos. Empires collapsed, ten million people died, and the old certainties about order, progress and the nature of Europe were shattered on the Western Front.
Young men from this country, including my great-grandfather, left small towns and farms to cross oceans and fight in a conflict that must have felt beyond their comprehension or control.
They returned home and rebuilt. Yet, less than 20 years later, they faced another global conflict in the Second World War. They confronted fascism, a disciplined and well-resourced movement that conquered much of Europe and appeared, in 1940, to be winning.
The outcome was not inevitable. It was not guaranteed. People were frightened, and they were right to be frightened.
They are called the “Greatest Generation” for good reason. Many of them were children of the Depression. They had already experienced hunger, loss and hardship. Then, as the world began to recover, they were called upon to do the hardest thing imaginable.
They answered the call and went to Europe and the Pacific.
Those at home rationed, sacrificed and waited, often not knowing whether the letters would stop coming.
What made them great wasn’t that they had no fear.
It was that they understood that freedom to live well, raise children in peace, speak your mind and choose your leaders doesn’t last on its own. Someone has to stand up for it, and their generation did.
But they didn’t just win a war. They built the peace that followed.
They built the hospitals and the schools here at home. And they created the international institutions designed to make sure it could never happen again.
The very rules-based order we are now working to preserve? They built it.
They were not only warriors, but architects of a world that was, for all its imperfections, more just, more prosperous and more peaceful than anything that had come before.
Then came the Cold War.
Forty years of living with the constant threat of nuclear annihilation. Yet science advanced, democracy spread and human rights improved. In 1989, the Wall came down, not because of war, but because of powerful ideas and the courage of ordinary people who refused to keep living a lie.
We are the inheritors of what they built. The question is whether we prove worthy of that inheritance.
History teaches us that the world has always had its inflection points.
Those moments are always the most unsettling.
They are when dictators seek to dominate, when fear replaces reason, and when the urge to turn inward is strongest.
But they are also the moments that reveal character. The moments that determine what kind of world comes next.
And so I remain relentlessly optimistic.
Despite the pressures of our age, we live in a time of extraordinary human capability.
In just one generation, over a billion people have been lifted out of extreme poverty.
Child mortality rates that would have seemed impossible to our grandparents are now normal in much of the world.
More people are educated and more women are involved in public life.
The tools available to address our greatest challenges, such as clean energy, medical science, digital connectivity and agricultural technology, are more powerful than ever before.
The Indo-Pacific is not just a region of risk, but also one full of opportunity. Innovation and enterprise can be found from Auckland to Ahmedabad and Tokyo to Timaru.
Small countries have often done well during times of change when they are coherent, trusted and stand for their values and interests. New Zealand has its own version of that story. At our best, we have always positioned ourselves on the right side of history. That’s who we are.
So yes, the world is unsettled. The order we depended on is under real pressure. And there are forces in global politics that none of us can fully control.
But here’s what we can control: how prepared we are, how resilient we are and how well we stick together.
We can’t control the storm, but we can secure our future within it.
And that is exactly what I want to talk to you about today.
In a more volatile world, we must focus on controlling what we can control, and that starts at home.
For too long, we’ve assumed our location protects us, that an ocean and a quiet reputation are enough. They aren’t. Geography gives us time, but it doesn’t give us immunity.
We have assumed our international relationships would carry us. They matter enormously, but we must invest in them. They are not unconditional; they are sustained by contribution. Partners support those who show they’re willing to help themselves.
We have assumed large investments in renewable energy would insulate ourselves from energy shocks offshore.
We have assumed our economy would always bounce back. But, as I’ve said before, New Zealand needs to get its finances in order for long-term growth. An economy that can’t support itself in a crisis is a major risk both strategically and financially.
And maybe most importantly, we’ve assumed our social cohesion is a given. That New Zealanders will always stick together when times are tough.
But history shows that’s not always true. Social trust isn’t inherited. It’s built and needs to be looked after.
Those issues aren’t just academic. They really matter for Kiwis.
Secure and affordable energy matters just as much for manufacturers here in Auckland, as it does for mums and dads battling to keep up with the cost of living.
Secure access to global markets matters just as much at the milking shed, as it does for cutting edge companies like Halter and Rocket Lab, competing for capital and talent on the world stage.
And financial security matters just as much for Kiwis meeting the cost of a mortgage, as it does for governments worldwide grappling with the cost of borrowing.
The bottom line is we can’t have prosperity – more jobs, more exports, and higher wages – without security.
And in 2026, risks to our energy security, financial security, international security, and our social cohesion, each threaten our future as a wealthy, inclusive and diverse trading nation in the South Pacific.
Each issue demands a coherent response, anchored in an overall objective of strengthening our collective national security for a more volatile and uncertain world.
Today I’d like to provide some guidance on my party’s direction of travel on some components of that national security, before speaking briefly about our priorities in this year’s Budget.
First, international security and our presence offshore.
As I spoke about earlier, flagrant violations of national sovereignty, such as Russia’s illegal invasion of Ukraine, and heightened great power competition in the Indo-Pacific have each contributed to a more volatile and uncertain world.
As a small, trading nation, we are disproportionately exposed. We have a strong voice, but in an era increasingly dictated by hard power, our choices are limited.
Enhanced investment in our own defence capability is critical, allowing us to support both our own national security, and the resilience of our wider region, the Indo-Pacific.
And in an era where trade and security are increasingly interrelated, investment in our defence capability also represents an investment in our economic security and our prosperity.
If re-elected, National is committed to continuing to implement the Defence Capability Plan, double defence expenditure as a share of the economy, and prioritise interoperability of our defence forces with our only ally, Australia.
But for a small country like New Zealand, our security depends as much on the system of rules, relationships and institutions that have developed over decades, as it does the size of our defence force.
That’s why in this term of Government, diversification of both trade and defence relationships, particularly in the Indo-Pacific, has been an urgent priority. Upgrades to our relationships with India and Singapore, closer cooperation with NATO’s IP4, and ASEAN, and our role in the Pacific Island Forum are each critical steps against a volatile international backdrop.
And we will continue to develop that latticework of interlocking relationships – bilateral, regional, and global – that together provide depth and resilience.
In a more volatile world, some of our traditional friends and partners seem to be doing the same – forging new partnerships shaped by many of the values we hold dear, and their own support for the rules-based international order.
The multilateral values and institutions that have underpinned our prosperity may be under strain, but they haven’t perished. We must evolve and remake them.
New Zealand, with others, must continue that mission in the months and years to come.
For example, we will continue the work we started last year to strengthen the dialogue between the EU and CPTPP, and to reinforce the rules of international trade.
And as Lawrence Wong and I discussed last week, where high standards can be met and New Zealand’s interests are served, we will explore expanded access to the recently signed arrangements between New Zealand and Singapore on trade in essential supplies.
Second, I want to talk about energy independence.
New Zealand’s energy vulnerability is no longer a theoretical risk; it is a live crisis on full display in the Strait of Hormuz every single day.
Every week I speak to farmers, growers, manufacturers, truck drivers and tradies whose lives and businesses have been affected by events half a world away.
And that’s not just the rough and tumble impact of globalisation.
On too many occasions, private capital, eager to bolster domestic energy production, has been pushed to the sidelines by overzealous planners and politicians in recent years.
Several high-profile projects are now getting underway, thanks to our reforms like Fast Track, which I expect will continue to grow in popularity by leaps and bounds.
The reality is that when faced with energy shock after energy shock, it’s very hard to justify backing the skink over the solar farm.
Other regulatory handbrakes, like the ban on exploration for offshore oil and gas, have been more permanently chilling.
As a Government we will continue to pursue strategic energy reserves and options, like LNG, the strategic coal reserve at Huntly, and our recent procurement of 90 million litres of diesel to be stored at Marsden Point.
Yes, each of those options are costly, but less costly than the alternative of regular but ultimately unpredictable shortages.
And more action is required.
Energy independence must be treated as an immediate national security interest, instead of a contributing factor to a long-term climate strategy.
We will never compete on the global technological frontier without abundant, affordable energy.
And the manufacturers I’ve spoken to here in Auckland are right that the Government does have a role in acting deliberately and forcefully to achieve exactly that.
Third, social cohesion.
Ultimately, our greatest strategic asset is the trust that New Zealanders have in each other and in our institutions. Disinformation exploits division. And adversaries will always probe our social fault lines looking for leverage.
But recent years have brought new pressures.
During Covid, Ministers, given extraordinary powers by the Parliament, too often prioritised their own political interests over the interest of the public in honest and open government.
The media, determined to flatter New Zealand’s relative performance, also failed, accelerating a long decline in public confidence.
Since then, failed immigration policies in Europe and North America have also stoked a politics of division online. Despite prudent policies and the natural advantages of geography, immigration now seems to be an emerging political issue in New Zealand, too.
Holding our society together under those pressures will be challenging.
As MP for Botany, I represent a part of New Zealand which is more diverse than most. Thousands of Chinese, Korean, Malaysian, and Indian Kiwis call Botany home.
Kiwis who work hard, volunteer, serve their community, and make a contribution.
The kids who play cricket with your sons and daughters. School teachers. Business owners. Doctors and nurses.
Kiwis who deserve better than being unfairly and unreasonably vilified.
But that only works when we have a smart, targeted, and fair immigration system, that serves New Zealand’s interests.
It’s worth acknowledging that at least some of the political fracturing evident in Europe in recent years is the result of politicians refusing to implement the preference of their voters on immigration.
Earlier this year, Erica Stanford spoke on many of the recent changes we’ve made to strengthen our immigration system, designed to prioritise skilled, not unskilled, migrants – through higher English language requirements, more enforcement and tougher penalties.
The temporary work visas granted under the India FTA are anchored in that approach, with visas available for specific occupations, where we have workforce shortages.
It’s an issue we’ll watch closely, and you should expect to see careful policy on immigration from National as we get closer to the election.
And my message to the business community is that when it comes to immigration, when faced with a choice between social stability and your bottom line, I will choose the former every single time.
Finally, our financial security.
The truth is that small countries which borrow money from offshore can only live on credit for so long. Eventually, the bill must be paid.
And with ratings agencies and bond markets increasingly suspicious of western governments’ political courage to address long-term fiscal pressures, that bill is only likely to become more expensive.
Too many countries, including New Zealand, spent the post-Covid years dining out on fiscal headroom accumulated by previous generations of political leadership.
In recent years, our Government has run tight Budgets in an effort to chart a path back to surplus. Crises offshore have made that path harder.
We must stay the course. Our status as a high-income nation is not a historical certainty. Fiscal credibility is a precondition of our prosperity.
In this year’s Budget we will prioritise maintaining that credibility.
Budget 2026 is about securing New Zealand’s future. Fiscal repair balanced with careful capital investment features heavily in that story.
The good news is that with the Budget now officially signed off, I can confirm a few details today.
First, the Government’s fiscal strategy underpinning that approach – and our commitment to achieving it – remains unchanged.
The Government remains committed to putting debt on a downward path towards 40 per cent of GDP, and to returning the books to surplus by 2028/29.
Achieving that will be a tall order and will require careful choices in the years to come.
But responding to the current fuel crisis – a crisis of national resilience and economic security – through more spending would risk leaving New Zealand even more exposed.
So, in that spirit, I can confirm that the Minister of Finance will once again keep new spending in the Budget below the operating allowance previously set in the Budget Policy Statement.
This year I’m pleased to say that the net operating package in the Budget will be $2.1 billion, or around $300 million smaller than the $2.4 billion allowance set in December, despite the recent crisis.
That’s achievable because, while we continue to invest in essential services, like health and education, for the third year running we have been able to achieve significant savings across Government.
At the same time, while we continue to prioritise a return to surplus, the recent crisis has acted as a timely reminder that significant levels of capital investment will be required in the coming years.
To build modern and resilient infrastructure able to withstand an increasingly volatile world.
To develop a defence force, which is fighting-fit, capable of keeping Kiwis safe and safeguarding our region from malign interference.
And to invest in the schools and hospitals New Zealanders rely on to receive modern, responsive public services.
So this year’s capital package will be larger than originally planned, at a net $5.7 billion.
That doesn’t reflect a permanently higher rate of borrowing – we’ll need to get the balance right in the years ahead, as we rebuild our fiscal buffers.
Promoting financial security isn’t just about the Government’s financial position.
The truth is that as a country we don’t save nearly enough, and rely too much on money borrowed from overseas to support our lifestyles.
That must change.
Government’s role must shift from simply meeting the rapidly growing cost of New Zealand Superannuation, to which we remain committed, to a stewardship role for New Zealanders’ financial security, supporting greater levels of private savings and investment.
In last year’s Budget we agreed to lift KiwiSaver contributions from 3 per cent to 4 per cent. If National is re-elected, we intend to lift contributions further to 6 per cent each for employers and employees.
Some commentators have recently recommended a further set of changes to support the long-term health of the scheme, several of which have also been recommended in the past by the Retirement Commissioner.
National is considering those changes and we’ll have more to say on our KiwiSaver policy soon.
In closing, there is a quote attributed to Pericles that has stayed with me: “Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you.”
The same is true of the world order. We can choose not to pay attention to it. But it will not return the favour.
We have what the world wants. We are a reliable partner. We have values worth defending and a future worth building.
But none of that is guaranteed. It must be chosen, and it must be worked for.
The world is at an inflection point. The question is not whether New Zealand is affected – it is. The question is whether New Zealand is ready.
Today, I am asking you to help make us ready. Not through fear – but through the deep, quiet confidence of a nation that knows who it is, what it stands for and what it is capable of achieving.
Thank you.