Finance Minister Nicola Willis admits the Government will fall short of its child poverty reduction targets as she backs Budget 2026 as the responsible path to long-term prosperity.
Speaking to Breakfast on the day after she delivered her third Budget, Willis said the gap between where things sit now and the child poverty targets were a "very difficult gap to close".
Under the Child Poverty Reduction Act 2018, the Government is legally required to set and meet three-year and ten-year targets. The key measure — the proportion of children living in households with incomes less than half the median, after housing costs — has a 2028/2029 target of 10%.
Last May, she said she was committed to meeting the targets, but this morning, she said the target of 10% of children living in poverty would not be met.
"Well, the reality is that we're not on track to achieve that, and by a long shot."
The real figure was expected to sit at around 18%.
"If we don't get the books back into surplus, and we let the debt mountain keep climbing, that's going to hurt every man, woman, and child in the country materially," she said.
"Ultimately, to get people out of poverty, as I say, we need more people in work, and this Budget forecast 220,000 more jobs being created over the next few years."
The Finance Minister says the Government will fall well short of its 10% child poverty target — with the real figure expected to sit closer to 18%. (Source: Breakfast)
She added that changes to the in-work tax credit would make a "materially statistically significant difference" to child poverty.
"There is... a gap there, and I just point out that that level of child poverty has been a persistent challenge for many governments, and we also think that educating our kids well, having a good support system that way, is part of how you break the poverty cycle. We're making progress there."
Willis also gave an explicit warning about New Zealand Superannuation, echoing earlier sentiment from the Prime Minister, saying the country would not be able to keep affording it in its current form.
"The honest answer is no. Something will have to change.
Superannuation was currently projected to cost $30 billion a year by 2030 — up from $20 billion now.
Willis said the conversation needed to be had on how to manage it fairly, including the role of KiwiSaver and ensuring younger Kiwis were not left with a disproportionate tax burden.
She took aim at both New Zealand First and Labour for resisting reform, saying any party that wanted to be considered mainstream "can't pretend that the superannuation settings will never have to change".
A $450 million fund set aside in the Budget for fuel price pressures would only ever be used for temporary, targeted responses, Willis said, ruling out using it for any policy changes prior to the election.
"In a situation where fuel prices stay higher for longer, or they spike, I want to be able to look New Zealanders in the eye and say we are ready to take further responses if needed, timely, temporary, targeted responses, and so that's what that fund is about."
The books were forecast to return to surplus in 2028-29 — a year earlier than previously expected under Willis' preferred OBEGALx measure.
She defended the decision not to offer direct cost of living relief, saying the priority was bringing inflation and fuel prices down rather than "spraying election bribes around in a way that drives up inflation".
"What matters to making New Zealand more affordable is those prices coming back down, and Treasury's forecasts are that that will happen, that wages will start growing faster than inflation," she said.
Health was the biggest winner, with $5.8 billion in new operating funding, hospital upgrades in Whangārei, Tauranga, Hawke's Bay and Palmerston North, and bowel cancer screening eligibility lowered from 58 to 56.
New mothers will be entitled to a three-day hospital stay after giving birth — phased in for first-time mothers initially, with community and private providers used alongside Health NZ to ensure capacity.
Other allocations included $447 million for Corrections to manage a rising prison population, $50 million for frontline police, $69 million to double Trades Academy places to 20,000, and $1.773 billion to extend the Waikato Expressway from Cambridge to Piarere.
The morning's headlines in 90 seconds, including Dame Lynda Topp slams the budget, new MAFS allegations, and the All White who’s going viral. (Source: 1News)
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