ACT wants $10b slashed from the public service, $12.4b lower debt by 2031 and a lower operating allowance

ACT's fiscal plan promises a $12 billion cut in government debt in four years, $10b cut from the public service and a bigger surplus than currently forecast. 

While broad-based tax cuts are not in ACT’s Fiscal Plan, "several strategic tax cuts are,” ACT leader David Seymour said. That includes earnings inside KiwiSaver, crypto and charity donation caps. 

Seymour previously indicated he would much rather be in a position where the government was in surplus first before rolling out tax cuts. 

Of the tax cuts that are in ACT’s fiscal plan, Seymour said they are funded through savings rather than borrowing more.

ACT wants the country to have $12.4b lower debt by 2031, compared to current Treasury forecasts.

“Less debt gives New Zealand room to respond to the next earthquake, a financial crisis, pandemic or other disruption,” he said.

The plan lowers public service spending by almost $10b over four years. 

“Excluding frontline services for Health, Education, Police, Defence, and the Ministry for Children, the rest of the Government is spending 20 per cent more than in 2017. That’s after adjusting for inflation and population growth," Seymour said.

“ACT will return spending, outside protected frontline services, to its 2017 level per person, adjusted for inflation and population growth. Since 2017 we tried bigger government and higher debt - it's not working and people are not better off. We need to go back to what we know works."

Seymour wants the Operating Balance Before Gains and Losses (OBEGAL) to be at a surplus of $13.6b, compared to $8.9b by 2030/31, with OBEGALx at $16.4b compared to $11.7b.

It would keep a $2b annual operating allowances “to meet cost pressures and fund improvements in essential public services, including health and education”. That was a drop of $400m a year.

The plan comprises mainly of pre-announced policies, as well as two policies that were yet to be announced, one labelled as a tax relief policy costing $264m in the first year, and the other only described as an ‘initiative to be announced’, costing $100m a year.

It would also increase the superannuation age to 67 by 2035, introduce a five-year welfare stand-down time for residence class visa holders and remove KiwiSaver subsidies.

Tax promises

• Remove tax on qualifying investment earnings inside KiwiSaver funds
• “Return net carbon auction revenue to New Zealanders through a Carbon Tax Refund”
• Uncap the donation tax credit
• Reform crypto tax rules

Read the fiscal plan here:

New spending

• Expand Pharmac for minor ailments
• Tourism dividend of $1 per guest night to councils
• $35 million a year for a Young Investors Fund to encourage savings and financial literacy
• ‘Overstayers investigation unit’
• Retail crime: Additional rural policing, targeting 100,000 extra patrol hours a year
• Electronic money management systems for those on the jobseeker benefit for more than four months
• Three Strikes for Burglary threshold: Minimum three-year prison sentence without parole for offenders
• Portable national clearance for paid workers and volunteers who work with children
• Index the independent school subsidy to public school operational funding uplifts

Cuts for savings

• Reduce the operating allowance by $400m a year
• Public service: Return spending to 2017 levels per person, outside of non-welfare spending and frontline services. ACT estimated this would save about $10b over the forecast period. That would be done through means such as:
  • Abolishing ‘demographic ministries’ (estimated ($187m a year)
  • Reducing foreign aid to 2017 levels ($283m a year)

ACT public service spending savings estimates

'Welfare for the wealthiest'

Labour finance spokesperson Barbara Edmonds said ACT's plan "raises serious questions about what further cuts New Zealanders could face under another National-led Government." 

“ACT is proposing nearly $10 billion in cuts, including scrapping some ministries and reducing funding for foreign aid and environmental programmes," Edmonds said.

“He [Seymour] also wants to end annual government KiwiSaver contributions for eligible workers, raise the superannuation age to 67 and cut disability entitlements. New Zealanders deserve to know exactly who will be affected and what support they'll lose."

Labour released its fiscal plan earlier this month, promising to retain the forecasted return to surplus in 2028/29 and to keep the operating allowance at the $2.4b set at Budget 2026. National is expected to release its fiscal plan in the coming week. 

Green Party Co-leader Chlöe Swarbrick described ACT's fiscal plan as "welfare for the wealthiest," that would continue to "shovel money upwards."