'Tight control of discretionary government spending': Finance Minister Nicola Willis says Budget 2026 will focus on 'supporting the delivery of core public services'

Finance Minister Nicola Willis says she will deliver her election year budget on May 28, saying it'll be no surprise to anyone that "savings and reprioritisation" will features.

Speaking to Parliament's Finance and Expenditure Committee (FEC) on Wednesday, Willis said the Budget would focus on; “supporting the delivery of core public services - in particular, investments for healthcare, investments for education, for rebuilding the capacity of our Defence Force and in our law and order protections.”

In order to make these investments, Willis said this year’s Budget will; “demonstrate tight control of discretionary government spending and will fund only a limited number of commitments.”

“There will be no splashing the cash … our Budget will show careful stewardship of public finances.”

Budget 2026 will have an operating allowance of just $2.4 billion and a capital allowance of $3.5 billion.

The Budget Policy Statement for 2026, released in December, said: “Any future adjustments would have to be consistent with the overarching objective to get the government’s books back in order and restore discipline to public spending.”

“Existing pre-commitments mean there is only $1 billion per year, on average, left to be allocated from the operating allowance for Budget 2026.”

'Act as households do'

Most agencies and Ministers would need to plan to manage service pressures and other commitments with little or no additional funding, the statement said and this was reiterated by Willis at Wednesday’s FEC meeting.

“We are expecting them to act as households do, which is to say, in order to keep investments going in the important things like our children’s education and healthcare, we will need to make sure that we are not making big discretionary increases in spending elsewhere,” she said.

Willis said the Government was running a “tight ship” and it was because of this that “tax relief continues to flow into New Zealanders’ bank accounts and that the investment boost tax relief for businesses continues to operate - fixing a basic aspect of our tax law now but also building a more productive future for New Zealand”.

Targets

Speaking to interest.co.nz in an interview late last year about the 2026 Budget, Willis said: “Our focus across law and order, health and education has been [that] it’s not just enough to say we put more money in, actually you need to have targets that demonstrate you’re achieving more for the funding that you provide.”

In health, Willis said she expected to see more progress on the health targets the Government has set.

For example, this included things like immunisation rates for children and wait times for elective surgery.

Willis said it was also about ensuring the country had a workforce that could deliver the services people needed. She pointed to an increase in training of doctors and the establishment of the Waikato Medical School.

“We will keep our progress on building those workforces for the future,” Willis said.

When it came to education, the Government wanted to ensure resources were aligned with its introduction of structured literacy and numeracy, she said.

As for law and order, Willis said the Government would “continue to resource a fully functioning correction system so that judges can send away people who provide a threat to others.”

“So our agenda, those targets are set up very clearly from the prime minister down and we allocate resources from taxpayers in a way that supports the delivery of those targets,” Willis said.