Budget 2025: A tale of the charts

Friday, 23 May 2025

Finance Minister Nicola Willis speaks to The Post on Budget 2025.

Aside from the various Budget spending measures that Government’s of either stripe come up with when delivering Budget, there are some very important fiscal and economic charts which the Treasury produces.

They include charts that cover economic growth, fiscal policy and where the Government spends its money.

While there are a great many charts and indicators, we have run through six that we think are important and worth having a look at, as well as some Budget day photos.

Finance Minister Nicola Willis walks into Parliament’s banquet hall to deliver her speech to the media and analysts with Chris Bishop, David Seymour, and Shane Jones.

OBEGAL X

The first is OBEGALx. Which is the operating balance before gains and losses (and excluding ACC). This is the Government’s new preferred measure of whether the books are in surplus or deficit - the previous measure, OBEGAL, included ACC in its calculations. The new measure makes the overall position look better than the old one.

The awkward hug - a mainstay of Budget days after the Minister of Finance does their thing.

Budget 2025: Operating balance (before gains and losses, excluding ACC, year ending June 20).

It shows a razor thin surplus in 2029. But also, interestingly, shows how since the global financial crisis New Zealand has run significantly more budget deficits than surpluses. The two big dips are around the Christchurch earthquake and Covid-19.

Net core Crown debt

Associate finance ministers Chris Bishop and David Seymour look on during Nicola Willis’ Budget lock up presentation.

This is the Government’s preferred measure of debt and is gross debt less any liquid assets the Government could realise.

Again, since the global financial crisis in 2008 this has risen and then got a big spurt during the Covid-19 period during which the Government effectively subsidised big swathes of the economy. It is expected to peak at 46% of GDP. Treasury says that 50% is the upper limit of debt for New Zealand to be in a position to withstand any large external shock.

Getting this curve going down has been a key objective of the Government, but even if all goes well on he current track it wont begin reducing for probably another four or five years.

Opposition leader Chris Hipkins denounces the Budget in his reply speech after Nicola Willis handed down her second Budget.

Core Crown expenses

Core Crown expenses basically tallies up spending that is done through ministries and departments - social welfare, education, health, police and the like.

Finance Minister MP Nicola Willis delivering her Budget address in the House.

Budget 2025: Economic growth in real GDP

The chart below shows it not is dollar terms - in nominal dollars it will continue to increase, but as a proportion of the economy.

What this chart shows is that by the end of the Key and English Government in 2017 and beginning of the Ardern Government, it had dropped to a bit above 27%. That of course shot up during the Covid-era and has basically remained there since.

The current Government’s goal is get the proportion of expenses as a share of the economy back below 30%.

Associate finance ministers Chris Bishop, David Seymour, and Shane Jones. On the far right is Secretary to the Treasury, Iain Rennie.

Budget 2025: How taxpayers' money is being spent.

Economic Growth

Historically, annual economic growth consistently between 2-3% is considered normal while growth at or above about 3.5% for an extended period is considered strong (although there are disagreements around exactly what strong is). New Zealand has struggled to keep that rate up consistently, especially since the post-GFC era.

In the chart below, the big post-Covid spurt is reflective of the fact that growth dropped during lockdown before roaring back strongly when normal economic activity resumed.

A key goal of the current Government is drive consistently higher growth and the forecasts expect growth to rise back as New Zealand has emerged from recession, but do not look overly rosy. They are also at the mercy of the international economic situation which has become less rosy and more unpredictable under the Trump administration.

So where does all the money go?

The below graphic was produced in the Budget documents in a document called “Budget at a glance” and is a visual illustration of how the taxes collected in a given year are spent.

As you can see form the chart, Health, superannuation and social security and welfare are the big areas. Over the coming couple of decades the two squares of NZ Superannuation and Health are expected to grow as New Zealand’s population ages and more people collect NZ Superannuation and call on resource in the health system.

This demographic crunch will be top of mind for whichever parties are in Government and will dictate many of the spending and taxing decisions over the coming couple of decades.

Finance costs, at $9.5 billion ,are the interest the New Zealand Government is paying on its borrowings and is forecast to increase to over $12 billion per year over the coming four years.

And finally, inflation

Inflation has been the indicator to rule them all over New Zealand politics since late 2021. It is measured through the Consumer Price Index which is essentially a basket of goods and services that Stats NZ measures every quarter to see how much prices have changed.

The Reserve Bank of New Zealand is charged with keeping inflation in a target band of between 1% to 3%. This chart shows that has been more or less consistently achieved from around 2012 to 2021.

Inflation is now back within the target zone and after the recent spike, the Reserve Bank is very sensitive to potential rises. The forecasts of inflation is basically for it to remain in check, meaning that its political importance should decrease over the coming years.