Budget 2026 () is the New Zealand budget for fiscal year 2026/27 that was presented to the New Zealand House of Representatives by Finance Minister Nicola Willis, on 28 May 2026. This was the third budget passed by the Sixth National Government.
Background On 25 May 2026, Prime Minister Christopher Luxon told Radio New Zealand's Morning Report programme that the 2026 budget would be a "grown-up" one and "free of any lolly scramble" unlike previous budgets released by the Sixth Labour Government, whom he described as "babysitters." That same day, Luxon reiterated the Government's fiscally conservative message during his morning interview with Newstalk ZB, saying:
During the Budget lock-up on 28 May, Finance Minister Nicola Willis described Budget 2026 as "not glamorous work," indicating a lack of tax relief and that the budget would focus on "tough love" and "responsible spending." During the 2026 Budget Speech, Willis said that the Government's "responsible approach" to spending would allow the New Zealand economy to return to surplus by 2028/29. She said the strained "rules-based global system" had led countries to boost their defence spending. Willis also acknowledged the impact of the 2026 Iran war on petrol and diesel prices for households and businesses. Willis also warned that the New Zealand Government was facing a significant burden of debt amounting to $9 billion in interest each year. She also said that New Zealand needed to reduce its debt due to its negative sovereign debt rating from Fitch Ratings and Moody's. Willis also rejected the idea of using "election-year band-aids and sugar hits" to "bribe voters," and said that the Government would focus on "getting the books in order."
Major announcements The Government reduced the budget's operational allowance from NZ$2.4 billion to $2.1 billion, while raising capital spending to $5.7 billion. The 2026 Budget contained $3.8 billion in new spending offset by $1.7 billion in savings.
Defence and intelligence Allocated $2.3 billion in capital funding and $1.2 billion in operational funding towards defence and intelligence. Allocating funding to retain existing New Zealand Defence Force personnel and to attract recruits to new specific areas. Investing $158 million in military drone systems, maintaining Anzac-class frigates and HMNZS Canterbury, and replacing the Royal New Zealand Navy's ageing fleet. Allocating funding to improving facilities at military bases. Allocating funding to ensure the continual operation of air, land and naval forces and assets.
Education Allocated $2 billion in education spending. Raising school operating grants by 2% in 2027 and early childhood subsidies by 1.5% from July 2026. Providing a 2% increase to subsidies for tertiary foundation courses and $284 million more to subsidise more student places between 2027 and 2028. Allocating $131 million from the 2026 budget into boosting literacy and mathematics for primary and intermediate children. Investing $559 million in school property development and roll growth. Investing $470 million in capital funding to redevelop up to 10 schools, build 232 additional classrooms, and purchase land for new schools. Allocating $74 million to supporting the implementation of a refreshed curriculum and new national qualifications. Allocating $212 million from the 2026 budget to continuing the Healthy School Lunches programme for the 2027 school year. Associate education minister David Seymour has indicated that the Government would make changes to the programme for the 2028 school year. Scrapping the Fees Free scheme for final year university students. Allocating $405 million to the tertiary education sector. Investing $25 million to boost funding rates for foundation education providers. Allocating $87 million to 1,000 more "Youth Guarantee" places to provide free learning for young people with few or no qualifications. Investing $69 million to double the number of Trades Academy places to 20,000 for high school students. Allocating $61 million in curriculum resources. Allocating for $20 million for teacher professional development and delivering the new curriculum.
Energy security and fuel response Allocated $198 million to energy security. From 7 April, the Government granted a $50 in-work tax credit to 143,000 working families with children to help with rising fuel costs caused by the 2026 Iran war. Another 14,000 families became eligible for a lower tax credit. While beneficiaries and pensioners were ineligible for the tax credit, their payments were adjusted from 1st April per procedure. The tax relief package was estimated to cost NZ$373 million for a year and was funded from the Government's operational allowance for the 2026 budget. Allocating $48 million from the 2026 Budget to cover potential losses from helping businesses transition from gas to alternative energy sources such as electricity or bio energy. Under the energy transition initiative, the Government would guarantee 80% of eligible bank loans (an estimated $1.2 billion) to allow banks to offer lower interest rates for companies switching from gas to alternative energy sources. Allocating $150 million for additional strategic fuel reserves to strengthen fuel resilience. Allocating $24 million in a temporary increase in mileage rates for support workers and patients traveling for specialist treatments. Allocating $450 million for additional temporary fuel-related measures as a "rainy day fund."
Foreign affairs Investing $110 million in international development assistance, with a focus on the Pacific Islands. Investing $145 million in protecting New Zealand diplomatic and trade missions abroad.
Health Allocated $5.8 billion in health spending (including $5.5 billion to frontline services). Allocating $35 million over the next four years to strengthening ambulance road services in order to improve patient care and support for frontline health staff. Key initiatives include establishing two new ambulance hubs in Auckland, recruiting more staff and upgrading technology. Investing $34 million in three day postnatal stays. The Government also confirmed plans to amend existing health legislation to grant woman a legal entitlement for a 72-hour postnatal stay at hospitals and other maternity facilities. Investing $15.5 million over the next four years in establishing a national pediatric palliative care service, which will consist of teams across the North and South Islands. This would supplement the sole specialist pediatric care physician at Auckland's Starship Children's Hospital. Investing $54 million in the drug purchasing agency Pharmac. Investing $33 million to lowering the bowel cancer screening age to 56 years, making 200,000 more New Zealanders eligible for the programme. Investing $682 million in capital investment including a new tower block at Whangarei Hospital and buying land for the new Drury hospital. Investing $180 million (including $128 million in operational funding and $52 million in capital funding) over the next four years to improving healthcare services in the Otago Central Lakes area. This investment includes expanding the emergency department of the Lakes District Hospital in Queenstown. Investing $930 million in purchasing new clinical equipment, tech upgrades and facility improvements.
Housing Allocated $430 million to housing initiatives. Investing $400 million over the next four years to launch a new financial incentive for local councils to promote housing growth.
Law and order Allocated 1.07 billion to law and order. Investing $70 million in purchasing three new unmanned underwater vehicles (UUVs) for the purpose of combating maritime smuggling. These UUVS will conduct checks below the waterline, reducing the need for diving crews. Investing $503 million in frontline Corrections services including resources to manage prison expansion. Allocating $215 million in capital investment to building new courthouses in Rotorua ($100 million) and new police stations in Whanganui and Greymouth. One of the new Rotorua courthouses will be used for the High Court, District Court, Coroners Court and tribunals while the second will be used for the Rotorua Māori Land Court. Allocating $50 million to supporting frontline Police services. Allocating funding to reforming the police firearms safety system. Allocating $21 million to the New Zealand Customs Service to combating drug smuggling and transnational crime.
Māori Allocating $48 million over the next four years to supporting the sustainability of Māori language broadcasting by helping Māori media organisations adapt to digitisation and produce Māori-language content. Earlier, Te Māngai Pāho's (the Māori Broadcasting Funding Agency) chair Reikura Kahi, chief executive Larry Parr and National Party MP Greg Fleming had lobbied the Government against reducing the agency's funding by $16 million (25 percent). Allocating $10 million from the Māori Development Fund to Te Māori Manaaki Taonga Trust, to promote international interest in Māori culture, creativity and storytelling. Allocating $8m towards aquaculture settlement obligations under the Māori Commercial Aquaculture Claims Settlement Act.
Public sector transformation Slashing 8,700 public sector jobs over the next three years to deliver $2.4 billion in savings. This is expected to reduce the 63,000 public service workforce by 14%. The public service overhaul would also involve the reduction of the number of government departments and increasing the use of artificial intelligence and other digital tools. $424 million worth of savings to re-prioritise frontline services. Reducing the Ministry for Culture and Heritage's funding by $27 million. Reducing the Ministry of Social Development's funding by $410.23 million over the next four years. These cuts will affect support services for emergency housing, employment services for solo parents and lowering the temporary additional support rate. The Ministry received $454.21 million in extra funding, with priority being given to upgrading the SuperGold Card. Reducing the Public Service Commission's funding by $4.41 million through staffing cuts. Reducing the Ministry for Regulation's funding by $1.6 million through savings on consultancy costs. Reducing the Ministry for Disabled People's funding by $1.46 million through restructuring its operating model and investing in artificial intelligence. Reducing Te Puni Kokiri's (the Ministry for Māori Development) funding by $23.6 million by reducing staffing numbers, contractor and consultancy costs. Reducing the Ministry for Pacific Peoples' funding by $2.8 million through staffing and operational changes.
Social housing and welfare Allocated $824 million to social housing and welfare. Increasing the accommodation supplement for people in private rentals and raising income-related rents for social housing tenants. Boosting weekly social housing support to 110,000 families by $15 while reducing support to another 80,000 families by $30 weekly. Introducing more stringent criteria for obtaining social housing including new tenancy duration limits and regular check-ins. Investing $69.2 million into supporting between 1,800 and 2,250 more social homes. Lowering the maximum rates for "Temporary Additional Support" from 30% to 25%, achieving $196 million in savings. Investing $22.4 million to help reduce the number of households entering emergency housing. Allocating funding to help solo parent beneficiaries enter the workforce. Allocating $45 million to food banks and school breakfast programmes.
Taxation Introducing a new 1% prudential levy on banks, insurers and other financial industry companies to cover the cost of services provided by the Reserve Bank of New Zealand. This is expected to generate $200 million in tax revenue over the next four years. Removing the "ute tax" requirement for owners of private motor vehicles to keep detailed logbooks.