Source: NZCTU
Security for all?
The government has framed Budget 26 as one that will “secure New Zealand’s future”. The key argument that Minister Willis and Prime Minister Luxon want to make is that “financial discipline” today is required to deliver “economic security” tomorrow. In Budget 26 this financial discipline takes the form of cuts to social housing tenants’ incomes, who will be $31 worse off per week from next year. It also takes the form of ongoing cuts to core public services – from social welfare to border control to food safety to our culture and heritage. When accounting for inflation, the cumulative real term cuts to core public agencies’ baselines that were announced will total 18% by 2029. This will devastate many services that New Zealanders rely on.
The government’s version of financial discipline also sees reduced support for students, with the ending of the final year fees free programme; on top of this, student fees will increase by 6% next year – for the third year in a row. It also sees real term cuts to early childhood education (ECE) subsidies and schools’ operational funding. ECE subsidies have gone backwards in real terms since 2020, and schools operational funding has gone backwards in real terms since 2021. And it sees scant relief for families across the country who are struggling with the cost of living.
From the NZCTU’s perspective, this is the very opposite of “securing our future”. Real economic security means that families have secure jobs, decent incomes, access to quality public services, healthy and affordable housing, and connected and cohesive communities. The government’s cuts to social welfare, public services, and education put these goals further out of reach. And the government’s failure to provide support for families struggling with out-of-control electricity, food, and transport costs will mean greater poverty, which means more fractured and insecure communities.
Budget 26 also fails to address many of the structural challenges we are facing as a country. Although healthcare expenditure has increased in nominal terms (it does so every year), this was likely not enough to maintain the system at its current, over-stretched state, where unmet care is already high. As a recent report from Kaitiaki Hauora finds, we have accumulated a large funding gap in health, of over $6 billion per year, largely because the system was underfunded during the Key/English governments. A responsible budget to secure New Zealand’s future would start to close that gap, which in concrete terms means supporting an expansion of the workforce, modernising our hospitals, and reducing wait-times for care, among other things.
There was no investment made in climate mitigation, and on the adaptation side, the only investment of substance was for future highway resilience projects. Roading resilience is important, but a much more ambitious programme of action is needed in this space. New Zealanders are now experiencing climate-change-driven weather disasters on a yearly basis. A Budget that was really about “securing our future” would put action on climate change at its centre.
The Budget did not bring housing security any closer for the tens of thousands of whānau living in precarious situations. Despite the declining property market in most parts of the country since 2021, New Zealand still has a chronic problem with housing affordability, both for renters and homeowners. We have failed to add sufficiently to our public housing stock and have failed to keep the existing stock in good condition. While Budget 26 did allocate some money to new social housing builds, these are not set to start until 2028/29. And at the same time it has announced this money, the government has continued its rollback of emergency housing support, which will contribute to rising homelessness – now understood to be at a record high – the very opposite of housing security.
There is no plan to address the rising problem of unemployment either. We now have the highest number of people unemployed since the early 1990s – over 160,000 Kiwis. And because the job market is so weak, people are staying unemployed for a long time. The number of unemployed people who have been out of work for more than 6 months has increased almost 150% since the beginning of 2023. In the March 2026 quarter, almost 65,000 New Zealanders had been unemployed for more than 6 months. This can have devastating financial and psychological outcomes for affected workers and their whānau, and it can be devastating for entire communities. Yet there was no economic development plan in this Budget – only the empty promise that the recovery has once again been “delayed but not derailed”.
At the same time that it has neglected to make investments in these critical areas, the government allocated almost $1 billion of new operating money and over $2.3 billion in new capital expenditure to New Zealand’s military. Spending big on the military at a time of growing poverty and economic precarity in New Zealand demonstrates this government has its priorities wrong. We do have the resources to meet the address the big challenges we face and make ordinary people’s lives better, but this government is choosing not to.
The “financial discipline” that Minister Willis and Prime Minister Luxon promote is intended to reduce the government’s debt levels. It is true that debt has gone up in recent years, largely because of the need to support incomes and the health system during the Covid pandemic (both good things to spend money on), and also because of much-needed infrastructure investment. But it is also true that New Zealand’s government debt remains at relatively low levels compared to our peer countries. On the International Monetary Fund’s figures, the average net-debt-to-GDP ratio across advanced economies was 79.1% in 2025, with New Zealand well below that at 25.8%. Maintaining government debt at sensible levels is important over the long run, but cutting expenditure during an economic downturn is not a good way to achieve this. If the government cuts jobs and spending when the economy is weak, this just further exacerbates the problem and actually makes it harder to reduce debt levels in the first place.
A better approach in the current context would be to rebalance New Zealand’s tax system so that the wealthy actually pay their fair share. As we know from the work of IRD, the wealthiest New Zealanders pay much less tax as a proportion of their income than ordinary people do. This is partly because we are an international outlier in not having a capital gains tax. Tax reform should be accompanied by investments that support good, productive jobs. The government has talked a big game on these issues in recent years but has not outlined a coherent plan for achieving them.
This lack of vision, combined with the fixation on a narrow conception of “financial discipline”, has contributed to the continual postponement of economic recovery over the past few years. In Budget after Budget, this government has made the wrong decisions.
Budget 26, then, continues Aotearoa New Zealand’s drift. There is no economic plan from the government to drag us out of the current funk. But there are plenty of reckless cuts to public services, to jobs, and to poor households’ budgets. This will not help get Aotearoa to a more secure place, economic or otherwise. It will not “secure our future”.
In the remainder of this report we cover the most important elements of the Budget from a worker’s perspective. As Budgets are full of technical jargon, we’ve provided a glossary of key budget terms at the back of the report.
Please get in touch if you’d like to discuss any aspects of Budget 26 or the NZCTU’s analysis.
Sandra Grey
President
New Zealand Council of Trade Unions Te Kauae Kaimahi
Original source: https://nz.mil-osi.com/2026/06/05/workers-analysis-of-budget-2026/