With months of pre-budget announcements behind us, the real detail lands today – including where the axe will fall to fund the government’s plans, writes Catherine McGregor in today’s extract from The Bulletin.
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A ‘no BS’ budget in a high-debt reality
It’s Budget Day, when finance minister Nicola Willis finally reveals what she’s calling the “no BS” budget – though its “formal, Christian” name is the “Growth Budget”. But can a budget really deliver economic growth at a time of fiscal constraint? Commentators are sceptical. As Liam Dann notes in the Herald (paywalled), despite the “growth” branding, the government’s room to manoeuvre is limited by high debt and inflationary pressures. It will likely try to address the growth conundrum with one simple trick: “reprioritising money from areas it thinks aren‘t boosting growth, to ones it thinks will”, Dann writes.
A stimulus package isn’t on the cards; at best, the budget is expected to be fiscally neutral, or even mildly contractionary. Willis says it will be a “reality budget” that delivers “genuine hope for the future”, but growth, in this context, may have more to do with political messaging than immediate economic outcomes.
Pre-announcements pave the path
As both Liam Dann and The Spinoff’s Alice Neville point out, the standard run of pre-budget announcements serve a strategic purpose: they allow governments to seed positive headlines while keeping the inevitable cuts under wraps until the main event. That strategy has been on full display this year, with big-ticket items like a $12 billion defence package, a $577 million screen production rebate, and over $774m in redress for those abused in state care announced in advance. The final document, released at 2pm today, is expected to include “one or two” attention-grabbing initiatives designed to dominate headlines – and hopefully draw attention away from the cuts.
A narrow fiscal tightrope
At the heart of Budget 2025 is a reduced operating allowance of $1.3 billion, making it the tightest in a decade, Neville writes. While capital spending has been nudged upward to $4 billion, operational spending (ongoing costs for things like public sector wages and infrastructure maintenance) has been slashed or reallocated, with pre-committed funds eating up much of the budget. A major savings drive – including billions clawed back from the pay equity reforms and cuts across a swathe of ministries – has allowed the government to launch new initiatives without significantly increasing debt. Still, as BNZ economist Matt Brunt notes, the operating allowance is “likely not even enough to cover natural cost increases from population growth and inflation”.
The government’s gamble is that reprioritisation, rather than fresh borrowing, will deliver a good-enough result. There’ll be “no rainbows, or unicorns either,” Willis said on Wednesday. For people worried that their public sector job is at risk, it’s not exactly a reassuring line.
Lockups and lamingtons
The rituals of Budget Day offer a touch of levity amid all the spreadsheets and political spin. At 10.30am, journalists and analysts descend on the Beehive’s Banquet Hall to read the budget in the lockup, a strictly embargoed zone with no phones, internet or contact with the outside world until 2pm. “It’s like a sleepover, with all the lollies. An exam, with all the pen and paper. A digital detox, with all the blocked internet access,” wrote Jessica McAllen in The Spinoff back in 2018.
The lockup is also famously obsessed with snacks: in past years, sausage rolls, sushi and lamingtons (or the lack of them) have sparked almost as much commentary as the fiscal outlook, writes Anna Whyte in The Post (paywalled). Willis’ own routine includes cookies baked by her children and, at day’s end, a whisky from the prime minister – just “one dram”, she clarified yesterday. After the embargo lifts at 2pm, the rest of the day is filled with speeches, standups, press releases and parliamentary debate.
As ever, The Spinoff will feature coverage throughout the afternoon and into Friday. This evening, look out for the traditional crossover episode of Gone By Lunchtime x When the Facts Change, with Toby Manhire and Bernard Hickey chewing over the biggest stories from the day, and what they could all mean for New Zealanders.
