Source: BusinessNZ
Treasury’s Pre-election Economic and Fiscal Update (PREFU) confirms that New Zealand is on a pathway back to an operating surplus. But it also reinforces the central message of BusinessNZ’s Election Priorities 2026: New Zealand needs stronger productivity growth, competitive tax settings, investment in infrastructure and skills, and a credible long-term approach to fiscal sustainability.
While the headline fiscal position improves over the forecast period, Treasury’s projections show that significant structural pressures remain beneath the surface, including bracket creep. Treasury estimates that fiscal drag from unchanged personal income tax thresholds will add $3.2 billion to tax revenue by 2030/31.
That improves the Government’s fiscal position, but it also means workers pay higher effective tax rates simply because wages and inflation rise over time.
BusinessNZ’s Election Priorities 2026 calls for personal income tax thresholds to be indexed to inflation or wage growth so that changes in the tax burden are transparent and deliberate, rather than occurring automatically through inflation.
Treasury’s forecasts also reinforce BusinessNZ’s call for a long-term plan to address the fiscal consequences of population ageing. The cost of New Zealand Superannuation is projected to be $8.2 billion higher in 2030/31 than in 2025/26, while superannuation and debt-servicing costs consume an increasing share of GDP.
BusinessNZ’s Election Priorities 2026 recommends progressively increasing the age of eligibility for NZ Superannuation in line with rising life expectancy to improve the sustainability of the retirement income system. Treasury’s projections show why this issue can no longer be deferred indefinitely.
With the election on November 7, BusinessNZ encourages every party to cost its promises against these forecasts and to show how new spending fits within them.
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