Budget 2026: How Nicola Willis’ already tight Budget was squeezed by coalition demands
Friday, 29 May 2026
Meeting coalition commitments has squeezed an already tight Budget 2026, with Nicola Willis forced to absorb costly wins for both ACT and New Zealand First while warning that superannuation alone threatens to consume more of the Crown’s future spending.
New Zealand First secured at least $1.3b while ACT got at least $444.9m in the coalition’s third budget - though the bigger wins were in what each party blocked.
Foreign Affairs Minister and NZ First leader Winston Peters protected his beloved department from cuts, with Treasury not expecting any savings over the next four years from the Ministry of Foreign Affairs and Trade.
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That appears to have led to discussions behind the scenes.
“That is the case. I share with Winston Peters a view that ensuring that our foreign affairs service is equipped to represent New Zealand's interests well in an increasingly unstable world, that is important,” Willis said.
“But I have communicated very clearly to him that in these tight times Kiwis are facing, we expect value for money.”
Peters also secured $109m in aid to increase development and humanitarian assistance in the Pacific and Indo-Pacific regions, $145m to sustain the country’s frontline diplomatic and trade network, and $20m for New Zealand to host the Pacific Islands Forum in 2027.
As rail minister, Peters ensured $1b went to KiwiRail for upgrades.
NZ First also managed to get $40m to upgrade the SuperGold card so it can be used as an official form of identification.
The SuperGold project is expected to be rolled out from October 2028.
Seniors Minister Casey Costello said there were more than 900,000 New Zealanders aged over 65 and that “many” did not have forms of identification, such as a driver licence or passport, although there were no exact numbers on how many seniors lacked ID.
But perhaps Peters’ biggest win was secured nearly three years ago in his party’s coalition agreement, when National committed not to touch the age of eligibility for superannuation.
National and ACT both have policies to raise the superannuation age to 67. That is at odds with NZ First’s position, which is to leave the entitlement where it is.
In the Budget lockup, Willis made a point of showing how much superannuation is already costing, and how much more expensive it is projected to become. She said it would cost $10b more over the next seven years, rising to $30b by 2030.
She showed journalists a slide setting out how much of future Budgets superannuation was expected to consume.
“People often talk about the rising Super bill as if it's something in the future. It's happening right now.
“The increasing cost of New Zealand’s superannuation in the next year alone is almost as much as my entire operating allowance.”
Willis then made a pointed comment to NZ First deputy leader Shane Jones, who was sitting to her left.
“In the absence of doing anything about our settings for the future, we will be committing a huge act of intergenerational inequity, that is to say that governments who put this off forever are essentially permitting themselves to tax people my age and younger more, and to pay them less Super in the future.”
She went on to accuse politicians who refuse to address superannuation’s affordability of ignoring reality.
“I put to you, parties who say they won't do anything about it are prepared to rob everyone in this country under the age of 50 for their own political expediency. I reject that approach.”
Jones later said New Zealanders would hear more observations from his party on superannuation closer to the election, “not in the context of the Budget discussion”.
“It’s all in the context of Budget discussions,” Willis retorted.
“The numbers are real.”
ACT leader David Seymour said the numbers on superannuation were clear and that it “seems that the winds of change are blowing”.
But ACT also constrained Willis’ options to bring in more money by blocking a possible bank tax.
“I've been open about the fact that I've been looking at fairness in the tax system for major banks,” Willis said.
But she said the options for achieving that, including a tax, “were not options agreed to by the parties of the coalition”.
Seymour then took the microphone to tell the Budget lockup that ACT’s position was based on principle.
This Budget includes a new bank levy to fund financial regulation. It will apply to banks, non-bank deposit takers, insurers and other financial market participants.
It is expected to bring in about $209m over four years, which the Government says will be less than 1% of the total profits of the four big banks.
Seymour said ACT supported that levy because it was “principled”.
“The Government has a position that we don't introduce new taxes beyond what is fair and already applied to us.”
ACT also secured its coalition commitment to give councils cash for consenting new homes, with payments increasing on a sliding scale depending on how many houses they approve.
It was not delivered exactly as promised. ACT had campaigned on sharing half the GST on new residential builds with councils, a policy that would have delivered more than $1b a year to local governments.
Instead, the Government’s scheme will deliver about $400m over four years - $100m a year which is roughly 0.6% of total council revenue.
Associate Justice Minister Nicole McKee also secured $44.9m to implement the new firearms regulator, saving gun owners from facing large fee hikes.