Of Finance Minister Nicola Willis' three Budgets, today's has arrived with the least fanfare — but as the coalition stages its final big act before the election, it may yet prove the most fraught. Here's what to keep an eye on.
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The Government has already shown its hand on the top-line numbers.
Prime Minister Christopher Luxon confirmed earlier this month that the net operating package — new day-to-day spending — would come in at $2.1 billion, roughly $300 million below the $2.4 billion allowance set in December's Budget Policy Statement.
However, on the capital side — money for buildings, roads, ships and other long-lived assets — the envelope is actually bigger than planned, at a net $5.7 billion.
The Prime Minister told business leaders in Auckland there’s “no money in the tank”. (Source: 1News)
It is the third consecutive Budget where the Government has come in under its own operating allowance cap, a point Luxon and Willis have made repeatedly in the lead-up.
A big chunk of Budget 2026 spending remains under wraps, but there are a few clues.
How much money in the kitty? Health in focus
So far, the health announcements have been relatively small — $35 million over four years for road ambulance services and $15.5 million for paediatric palliative care.
But with the Ipsos Issues Monitor showing health climbing as a priority for voters versus three years ago, more of what's expected in health is expected to land today.
The Finance Minister's pre-Budget speech on May 19 pointed to where money would go.
Health Minister says new service will help children with life-threatening illnesses and their families access specialist care closer to home. (Source: 1News)
She said savings from public service cuts would be "deployed to better purposes" such as "delivering more services in our health system ... increasing educational resources for our schools, [and] building infrastructure and strengthening our defence force and police."
"I look forward to detailing these investments on Budget Day," Willis said.
For one, schools have already had a pre-announcement — $131 million for maths and literacy. But despite Willis naming defence, police and health alongside education as destinations for the savings, there has been no pre-Budget police announcements.
That could mean the numbers are being saved for today.
Are the books holding together?
Before the war between the US. Israel and Iran reignited in March and closed the Strait of Hormuz to most shipping, choking off a third of the world's seaborne oil trade, the country's fiscal outlook had been improving — albeit unsteadily.
In a written update, Westpac senior economist Darren Gibbs said forecasters had once expected this year's Budget to "unveil a rare improvement in the fiscal outlook".
But, the Iran war and unprecedented oil crisis means that outcome is very unlikely.
New forecasts from the Treasury reveal a surplus is now not expected until 2030 – when the books will be in the black by $2.3 billion. (Source: 1News)
"The magnitude of the impact will depend on the Treasury’s assumption about the duration and implications of the conflict, which is uncertain," Gibbs said in an update.
How far Treasury has revised down its forecasts for growth and revenue will be one of the most consequential numbers in today's Budget documents, with implications that extend well beyond the day and into the early parts of the election campaign.
Notably, forecasts will show how far away the country was from a return to surplus, which was currently pegged at around 2030.
Labour Party leader Chris Hipkins has gone as far as refusing to commit to spending plans or detailed new policies before seeing the Budget, telling Q+A last week he wanted a clear picture of the Government's books.
With six months until the election, Labour is still holding its tongue on major policy announcements. (Source: Q and A)
Speaking to media several weeks ago, Willis said Treasury took the unusual step of reopening its economic forecasts ahead of Budget, and that the numbers that underpin today's books will reflect a weaker, more uncertain economy.
"That's an independent decision of the Treasury to do so, and … they will be what informs the Budget I present to you," Willis said last month.
She added the Government had been forced to "rework" Budget 2026 to accommodate costs it had not anticipated earlier, including its initiative to provide an extra $50 a week for low-to-middle income working families and support for care workers.
In April, Willis presented three Treasury oil shock scenarios ranging from Brent crude at US$110 to US$180 a barrel. Westpac economists said last week they expected today's forecasts to be "pitched near the less severe end of the range of those scenarios".
Fees-free replaced by more support for trades?
NZ First leader Winston Peters confirmed earlier this month that the fees-free tertiary scheme was being scrapped, and Willis backed him up.
But no replacement has been announced.
If something is coming, Budget will be the obvious time to announce it.
Peters appeared to give a hint when making his "Budget leak" while speaking to Newstalk ZB's Heather du Plessis-Allan.
"We're going to reshape it and repurpose it for the trades and a whole lot of industries where we do need it, and we're going to get a far better payback for our money, and we'll pay far less money for doing it," he said.
What might be new?
Unlike the coalition's first two Budgets, which arrived with headline announcements telegraphed in advance, such as promised tax cuts in 2024 and KiwiSaver changes in 2025's self-titled "Growth Budget", this one has kept its cards closer to its chest.
New guidelines have been launched today and Breakfast's Jessica Swan explains what it entails and why it matters. (Source: 1News)
That leaves several possibilities still live heading into this afternoon.
Firstly, with a tightening operating allowance, the Government will need to find savings to fund new spending. Last year's Budget offered a glimpse of what that looks like — the Best Start payment for new parents was means-tested, saving about $211 million.
Similar cuts to existing initiatives, whether in government programmes, welfare and benefits, or elsewhere, may feature again today.
There are also other initiatives speculated about in recent months.
Speaking to the Herald last month, ACT leader David Seymour hinted that the Government planned to share a portion of GST collected on some residential construction with local councils, a policy his party had promoted at the last election.
ACT deputy leader Brooke Van Velden’s member’s bill is set to have its first reading next month. (Source: Q and A)
"There’s a Budget on May 28th and details are still being nailed down, but there’s a commitment amongst the parties that formed the current government to introduce that ACT Party GST-sharing idea into a Budget this term," he said.
“That way you get the money where it needs to be because there are real needs in places like Queenstown and places like Auckland."
National had agreed to "consider" the idea in its coalition agreement with ACT. Housing Minister Chris Bishop had previously confirmed it was "part of the mix as we ponder".
If implemented as previously proposed, it could possibly direct significant new amounts of money to councils to help fund infrastructure with new residential builds incentivised.
Finance Minister Nicola Willis seeks a parliamentary inquiry into whether Kiwis are getting a fair deal. (Source: 1News)
Whether the Government will move on changes to bank taxation also remains a possibility. Willis said in July she asked officials to look at how banks were taxed here, including whether New Zealand should adopt something like Australia's major bank levy.
She indicated last year any announcement would come at this Budget.
But the Finance Minister would have to get the idea past coalition partner ACT and Seymour, who told The Post a month ago that the idea was "an interesting possibility" but opined "everybody knows taxing banks is taxing people who keep their money in banks."
He said at the time: "The Government should get back to surplus by managing its spending rather than finding new ways to tax people."
What else might there be?
On that spending side, Willis announced last week she wanted to amalgamate government departments, accelerate the use of artificial intelligence and cut nearly 9000 public service roles. She did not say what the mergers or AI use themselves might cost. Whether the Budget includes money to begin that process remains to be seen.
The Finance Minister says reductions will be gradual and spread across agencies as questions remain over impact. (Source: Breakfast)
With an upcoming election, several pledges from the last campaign remain also only partly delivered, raising questions of if newly-earmarked money will help close the gap.
On police, the coalition pledged 500 new frontline officers but thetarget deadline has been pushed out repeatedly, with Treasury noting it requires "significant catch up."
Meanwhile, on health, Luxon promised during a Newshub debate in 2023 to match Australia's bowel cancer screening, but so far the Government has only managed to lower the age from 60 to 58, while keeping 45 as a longer-term commitment.
And on transport, the Government's massive motorway-building programme faces a funding squeeze, with the Transport Minister already signalling greater prioritisation will be needed for imminent Roads of National Significance projects.
Labour leader says the reductions will impact frontline services and be “felt in every community". (Source: 1News)
Is there anything for households?
Willis has been at pains to frame this Budget as responsible rather than generous, drawing repeated contrasts with what she called Labour's "band-aid on a bullet wound" — a reference to the previous government's $350 cost-of-living payment in 2022.
That leaves a question about whether there is anything in the Budget with direct, immediate appeal to households feeling the pinch amid an election year.
For the second year running, the Government has ruled out a "lolly scramble."
When 1News asked Willis on Tuesday whether there might at least be a sweet treat, the finance minister paused briefly. "No," she said, with a sigh, "there won't be."
The only new spending announced this week with any link to the cost of living was the gas transition loan guarantee scheme.
The scheme is squarely aimed at firms — the press release even noted a business would need to consume 40 times the gas of an average household just to qualify.
With an election in November, there is still a chance the Government has kept something back for today. The alternative is that Willis walks into the campaign arguing that the most responsible thing she could do for households was not to offer them anything at all.
Budget 2026 will be delivered at 2pm today.
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