Big numbers for Budget 2025 - but will they be big enough?
RNZ / Samuel Rillstone
Budget 2025 will deliver some big numbers, but closer examination suggests they might not be all they seem.
Next Thursday (22 May) Nicola Willis will deliver her second annual Budget, setting out how and where money will be spent over the next financial year.
There are some giant figures; $190 million for social investment, $100m for kids needing extra maths help and a whopping $12 billion over the next four years for defence.
But according to Brian Roper, an associate professor in the political programme at Otago University, a key phrase to keep in mind when looking at these figures is "in relation to inflation".
"You always have to take account of inflation, because that's really what the government is spending in real terms as opposed to nominal terms," he says.
For example, you might have previously got by with $100 per week for groceries. But this year you find things are more expensive and you have to add $20 to your budget to keep buying the same list of items. That's an example of change in real spending.
But let's say you only upped your budget by $10. While it's technically an increase it's not enough to cover the more expensive grocery bill so it's really a cut. That's a nominal spending change.
Treasury has forecast 1.8 percent CPI inflation for this year and 2.1 percent inflation for 2026. Roper has crunched the numbers and says health needs an additional $588m and education needs an extra $435m, just to continue operating the way it is now.
But he's not confident that's what this Budget will deliver.
"Looking at the pre-Budget speeches of Nicola Willis and Christopher Luxon they are both crystal clear that they want to see a decline in government spending as a percentage of GDP," he says.
Roper says that means we can expect nominal increases to social sector budgets that won't be enough to match the rate of inflation.
Whether or not that's a good thing depends on which side of the political divide you're on.
"If you're Business New Zealand, or Federated Farmers or one of New Zealand's business lobby groups, then really what you want to see this government doing is cutting taxes on the one side and cutting social spending on the other. Pretty much what this government has been doing," he says.
But for low- to middle-income earners, or those who are reliant on public services such as health, housing, education and retirement income, Roper says this budget is unlikely to bring many benefits.
The Detail
also speaks to Luke Malpass, political editor for The Post and The Press, who says both sides of the political sector will try to swing the budget narrative in their favour in the lead up to Budget Day. That includes labelling them.
"So for example the 2023 Budget ... the government said, 'this will be a bread-and-butter Budget'.
"That was obviously when inflation was high, cost of living was very high on people's priority list and the idea of a bread-and-butter Budget is 'we're paring it back to basics'," he explains.
Malpass says an example of where the opposition won control of the narrative was the 2008 "block of cheese Budget", a label coined by Labour after working out that John Key's tax cut package actually only gave the average wage earner an extra $16 per week, the equivalent to a block of cheese at the time.
Malpass says this government is following a similar track to previous governments when it comes to what they deliver in each budget over their term.
"When you first get into power you want to spend money on your priorities ... and the second budget is usually a response to basically to whatever the economic conditions of the day are.
"It's worth noting that Grant Robertson, when he was still Finance Minister, had very much pointed out that this was what was coming down the line regardless of who won the 2023 election. So, politically the question is, how the government responds to that and how fair and reasonable New Zealanders think that response is."
Check out how to listen to and follow The Detail
here
.
You can also stay up-to-date by liking us on
or following us on
.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scoop
25 minutes ago
- Scoop
One Day's Notice Shows Rushed Approach To Gutting New Zealand's Science Funding
Revelations that the Marsden Fund was given just one day's notice of further funding cuts demonstrates the Government's cavalier approach to dismantling New Zealand's science sector, the Public Service Association Te Pūkenga Here Tikanga Mahi said today. The $15 million cut to the Marsden Fund is in addition to the cuts that were already announced in Budget 2025. "It is outrageous that the Royal Society only learned of the $15 million funding cut the day before the Institute for Advanced Technology was announced and was told to keep quiet about it," said PSA national secretary Fleur Fitzsimons. "This is no way to make policy that will affect New Zealand's scientific capability for decades to come. The Government should be engaging meaningfully with our science sector workforce on their reforms, not giving them a day's notice and swearing them to secrecy." "The Marsden Fund supports fundamental research - the kind of science that leads to breakthrough discoveries and innovations. "The Government keeps talking about wanting research that can be commercialised, but they don't seem to understand that you can't have applied research without the fundamental research that underpins it." PSA represents public sector science workers including in Public Research Organisations and Callaghan Innovation. "Our members feel demoralised and uncertain about the future. Many are considering leaving New Zealand for countries that value scientific research. We're haemorrhaging talent and institutional knowledge," Fitzsimons said. "The Government needs to step back from these rushed reforms and engage meaningfully with the sector and its workforce. The final report of Sir Peter Gluckman's review has been sitting with the Science Minister since April but still hasn't been released. "We call on the Government to pause these damaging cuts, release the Gluckman review, and have a meaningful conversation with scientists, researchers and their representatives. Our researchers and the New Zealand public deserve better than policy-making by stealth and ambush." Note The Public Service Association Te Pūkenga Here Tikanga Mahi is Aotearoa New Zealand's largest trade union, representing and supporting more than 95,000 workers across central government, state-owned enterprises, local councils, health boards and community groups.
Scoop
4 hours ago
- Scoop
Confirmation Of AA+ Credit Rating Welcomed
Minister of Finance Finance Minister Nicola Willis has welcomed confirmation from Fitch Ratings that the Government's careful management of the books has preserved New Zealand's strong credit rating. The international rating agency has affirmed New Zealand's AA+ rating with a stable outlook. 'At the moment New Zealand is borrowing overseas to continue providing good public services while we work to rebuild the economy and public finances,' Nicola Willis says. 'Historically, New Zealand governments have been able to borrow at reasonable rates because of their reputation for being responsible managers of public money, but that is not something that should be taken for granted. 'In the nicest possible language, Fitch's commentary contains a warning for New Zealand. 'Fitch says New Zealand's rating is underpinned by the Government's strong commitment to fiscal consolidation and an expectation that debt as a percentage of GDP will move to a downward path. 'However, Fitch warns that 'evidence of a weakening in the culture of fiscal commitment to fiscal responsibility would affect creditworthiness'. 'That is Fitch telling us that borrowing a lot more, as Opposition parties are proposing, would lead to a credit downgrade. That would increase the cost of government debt and also have a flow-on effect to the cost of household and business borrowing, as New Zealand would be seen as a more risky country to lend to. 'That is why this Government is committed to returning the books to surplus while continuing to invest in the public services New Zealanders need and shifting the economy onto a stronger growth path. 'Doing so requires some difficult choices, but the alternative is increasing costs for Kiwi households and businesses.'
RNZ News
6 hours ago
- RNZ News
The Panel with Kirsty Cameron and Stephen McCabe Part 1
Tonight, on The Panel, Wallace Chapman is joined by panellists Kirsty Cameron and Stephen. First up, new data shows reading and writing levels for school children are dire. The Education minister Erica Stanford unveiled a new government strategy aimed at reversing the downward trend and imporving handwriting. And they also discuss the pros and cons for nuclear power, particularly now data centres for AI demand huge amounts of power. has nuclear power's time come? To embed this content on your own webpage, cut and paste the following: See terms of use.
