NZ budget trims deficit to $15.06bn, cuts public services

The New Zealand government has presented a fiscally conservative budget, prioritizing financial stability by cutting public services and downgrading economic growth forecasts. Finance Minister Nicola Willis described the approach as taking careful steps to support New Zealanders now while strengthening the economy for the future.

The budget forecasts a deficit of NZ$15.06 billion for the fiscal year ending June 2026, which is narrower than the NZ$16.93 billion projected in December. Officials now project a return to a budget surplus in the 2029-30 fiscal year. The plan maintains a tight grip on new operating spending while vowing to boost capital expenditure on defense, schools, and hospitals. To fund new initiatives, the government is implementing deeper cuts across the public service, a move that officials acknowledge could jeopardize thousands of jobs. Specific cuts include terminating a program that paid for the final year of university for students.

Minister Willis warned that the conflict in the Middle East is fueling inflation and hindering recovery in the trade-dependent nation, severely limiting policy options. The Treasury department has significantly downgraded its...