Is the Budget still capable of a surprise?

Sunday, 31 May 2026

ANALYSIS: For years there’s been every effort to manage expectations of Budget day, and this year that effort was ramped up - and the population regularly hosed down - over what kind of lollies it might expect (very few). So was there anything left that surprised?

ANALYSIS: Budget 2026. Or as Prime Minister Christopher Luxon would call it “The Grown Up Budget”. Or as some who take a different view would have it, the “Reverse Robin Hood” budget.

However this budget hits, few could reasonably argue it was not foreshadowed that this set of financial plans would be more “bread and butter” than caviar and Dom Pérignon. Finance Minister Nicola Willis has been nothing if not explicit about warning voters not to expect any election-year surprises, lollies or magic tricks. After all, even without a fairly downbeat local economy, the country faces significant global economic risks that could derail New Zealand's recovery, including the oil shock caused by the ongoing war on Iran.

The Sunday Star Times asked four people with an interest in the Budget and the country’s general economic direction - and experience with budgets - whether they thought Willis had provided any kind of surprise in 2026.

Here is what they said.

Professor Matt Roskruge says it surprises him how small the prize seems compared with the pressure being applied.

Professor Matthew Roskruge (Te Ātiawa, Ngati Tama), Associate Dean Māori and Professor of Economics, Te Kura Whai Pakihi Massey Business School

What surprises me most is how small the prize seems compared with the pressure being applied to get there.

Budget 2026 is built around fiscal restraint, public sector savings and a forecast return to surplus. That sounds responsible enough, and there is always a case for managing spending carefully. But the surplus being chased is slim, forecast-dependent, and still several years away. Meanwhile, the costs are immediate: pressure on public services, reduced agency baselines, the end of final-year Fees Free, tighter welfare settings, job losses, and households still carrying high housing, food, transport and debt costs.

For Māori, there is precious little to celebrate. Māori are almost invisible in this Budget. The main Māori-specific visibility is narrow, with Māori media and te reo broadcasting standing out more than any broader Māori development strategy.

That does not mean Māori are unaffected. Māori will feel this Budget through mainstream health, education, housing, welfare, justice and employment systems. The problem is that those systems have not historically delivered equitable outcomes for Māori.

The Government will argue this is fiscal responsibility. Fair enough. But fiscal responsibility is not the same thing as chasing a fragile surplus while under-investing in the problems sitting in front of us. Will a slim surplus in a few years materially improve life for whānau struggling with rent, food, healthcare, education and insecure work?

Simran Kuar, founder and financial educator, says there were some good surprises - and not so good ones - in Thursday’s Budget.

Balancing the books matters. But so does whether whānau can balance their lives.

Simran Kaur, founder, Friends That Invest

Thursday's announcements came with plenty of surprises.

Starting with what the government got right: Health and education received the two biggest boosts, with a $5.5 billion injection into frontline health services, including a $35 million boost to ambulances. Every kiwi has a hair-raising A&E story, so we can all nod our heads when we say this injection into our struggling health sector is well overdue, though it would have been great to see more support for front-line healthcare workers.

Education seems to be the one area that I believe they’ve gotten right. A budget isn’t just about spending more, but also making strategic cuts. Don’t be mad at me, but the government did the right thing to axe the fees-free university scheme, saving over an eye-watering $1b, and instead is investing $2.1b into the education system - notably, $212m into reading, writing and math initiatives and increasing the number trades training enrolments.

Chris Money, NZ economics leader at EY Parthenon, says it is surprising just how difficult to categorise Budget 2026.

A prickly section of the budget is our increase in defence spending. Even with the current geopolitical tension, an increase in strengthening the navy and drones is one that many Kiwis, including myself, will likely feel uncomfortable with.

But the absolutely disappointing part of the 2026 budget? The plan to cut roughly 8700 public sector jobs by mid-2029. You cannot pour money into frontline services with one hand and fire the people who design these systems with the other. Nurses, teachers and doctors don’t work in a vacuum without the support of public servants, and hoping that AI will fix the issue is very much wishful thinking. It’s like filling the ocean with more fish but reducing the number of fishermen.

Chris Money - NZ economics leader at EY Parthenon

The surprising thing about the Budget this year is where the $2.4 billion from the public sector sinking lid is going - I expected it to go, at least in part, to future year provisions to give more headroom for election promises.

Instead, 100% of those savings have been committed in this year's Budget to make it balance'.

Other than that, I wonder if this is the Budget with no name. I've been working, or commenting on budgets for over 25 years and usually it's easy to label a budget. But this time it's different.

This Budget was full of short-term measures that were scattered broadly – with no overarching objective. We think the strategy is deliberate - fund what you’ve got to fund, keep the powder dry, and leave the heavier lifts for the pre-election period and the next Budget.

The centerpiece is the way the numbers have been balanced using future-year provisions, as that creates a difficult balancing act for whoever has to deliver as Minister of Finance the next parliamentary term.

Frances Valintine: CNZM, founder and CEO of academyEX and Love Heart says balancing the books is important, but unifying the country around a path forward is also critical.

Critically, the Minister has boxed future budgets into a corner by banking the public sector savings in this one. It makes this year’s Budget stack up, but means anyone wanting to do something different will have to find savings somewhere else.

The proposed departmental programme reductions are a pinch point too. A 5% plus 5% cut (on top of the 2% already in place) across most departments will be tough for any ministry that isn’t protected by new funding.

Treasury is also unclear on the totality of where the savings will come from - the policy is ‘bank the sinking lids and then work out where it comes from'.

Frances Valintine, futurist and CEO and founder of academyEX and Love Heart

I'm surprised how little detail has been provided on how our economy will grow, and which sectors will help shape future growth.

Getting the books back to surplus in 2028-29 matters. The foundations, services and infrastructure that make our country work are essential to building a stronger economy. I also hope that we are not missing the bigger conversation. We keep talking about productivity, growth and the future, which too often gets translated into automation, digital systems and artificial intelligence. But all of these technologies require highly skilled people, who bring values, judgement and innovation to their work. These people need to be trained, nurtured, attracted and retained, and that will only happen if we collectively know where we are heading.

I would love to see where the path we are taking will lead us. If we can see what today’s hard choices will mean for tomorrow, people are far more likely to get on board.

So while this Budget funds important foundations, I want us to be much more deliberate and determined about shaping our country to one we can all get behind, without polarisation and uncertainty.