Government’s books show finance minister borrowing billions to keep the lights on

Thursday, 9 October 2025

Treasury has revealed the state of the Government’s finances, and it shows we’re borrowing just to keep the lights on. Expenses have increased and continue to exceed revenue. The country’s still in an operating deficit of $9.3b, which is $600m higher than last year. But there are some signs of improvement: tax take is up, and growth in total expenses has slowed.

The state of the country’s books has been made plain, with Treasury releasing the financial statements of the Government.

The numbers reflect a tough economic climate and the coalition government tightening the belt on expenditure. However, there are some signs of improvement.

The bad numbers

Finance Minister Nicola Willis is still borrowing to keep the Government’s lights on. Net core Crown debt reached $182.2b - or 41.8% of GDP - which is an increase of $6.7b from the previous year.

The increase predominantly reflects the additional funding requirement to cover the cash shortfall in the year, which means the Government is borrowing in order to keep the wheels of the state turning.

Despite signs of recovery, total expenses continue to exceed total revenues. Those expenses are $183.5b, which is $3.4b more than last year.

This predominately relates to the impact of indexation on most main benefit types, which are generally indexed to wage growth or inflation. But particularly, it relates to the cost of superannuation which is up $1.6b because there are “more recipients due to an ageing population”.

While expenses are up, spending on physical assets is down $2.9b compared to last year, and $1.7b lower than forecast. The variances are attributed to lower investment by Kāinga Ora and delays in housing, defence and transport spending.

Total tax revenue has increased by $1.2b and economic activity has contributed to growth in most tax types - however this was partly offset by the impact of policy changes. Tax threshold increases from July 2024 meant a $1.6b decrease in the tax take.

Gross Crown debt is $203.7b, which is up $27.7b over the course of the last year.

But a potential hole in the books remains - the Government is continuing to hold off from accounting for the cost of reducing emissions. Commitments made under the Paris Agreement have not yet formed legal or constructive obligations, they say.

Another new number is 1533, which is the number of redundancies across the public service over the last year. Their redundancy payments totalled $80.4m.

Overall, the Government’s net worth has decreased by $1.9b, coming in at $179b at the end of June.

The good numbers

While outgoings are up, so are the incomings, with total revenue sitting at $169.8b, which is an increase of $2.5b compared to last year. Just under half of that increase has come from tax revenue.

Many of the Government’s key fiscal indicators this year are showing signs of improvement. The year-on-year growth in total expenses was the lowest it has been since 2021.

The Government is aiming to return to surplus by the 2027/28 financial year and aims to put net core Crown debt as a percentage of GDP on a downward trajectory towards 40%. The deficit this year was $9.3b - slightly higher than last year, but $0.9b smaller than forecast in Budget 2025.

The state-owned electricity companies have seen revenue increase by $1.7b more than expected. This was “largely due to stronger sales revenue earned by the electricity generators and retailers,” the report says.