Prime Minister Christopher Luxon promises Budget 2026 will deliver 220,000 new jobs and growth outpacing most of the developed world, but concedes the Government has no political pathway to address one of its largest long-term fiscal pressures.
Superannuation costs are on track to blow out from $20 billion a year to $30 billion by 2030. Luxon supports lifting the retirement age from 65 to 67 — in line with Australia, Canada and the UK — but admitted the numbers were not there for bipartisan support.
"You've got to have political ambition and consensus around that, and we don't at this point — with New Zealand First and Labour."
Luxon, speaking to BNZ Business Breakfast, said the Budget forecasts growth of 2.7% — higher than Australia, the UK, Canada, the EU and Japan. Wages were tipped to grow faster than prices and inflation was to remain low and stable.
"And of course that also means we should have low and stable interest rates over that period as well," he said.
The Prime Minister is forecasting 220,000 new jobs and growth outpacing most of the developed world, but admits there is no political consensus to address a looming $10 billion superannuation blowout. (Source: BNZ Business Breakfast)
Asked whether Treasury was making "heroic predictions" given global insecurity, Luxon pointed to New Zealand's position entering the fuel crisis caused by the US-Israel war on Iran.
"We entered the fuel crisis in quite good shape," he said, pointing to economic strengthening since December's forecasts.
"Our recovery is not being derailed, it's actually just being delayed."
The Budget drew criticism from some over its limited investment in artificial intelligence.
Finance Minister Nicola Willis had promised some of the around 8700 reduction in public sector workers would come from greater AI use,
Luxon said New Zealand's approach was deliberate — focusing on adoption rather than invention, and funding digital transformation through public sector savings rather than new spending.
"We are never going to be a country that actually invents the large language models. But what we should be the best in the world at is the adoption of AI and the application of AI."
He encouraged small businesses to experiment with AI tools, saying the most productive small and medium enterprises were around seven times more productive than the least productive.
Luxon outlined five priorities on productivity more broadly: improving education, embracing technology, building modern infrastructure, cutting red tape through RMA reform, and accelerating trade and investment.
"If we can do those five things, that's how we collectively lift the floor and actually lift the living standards for all Kiwis."
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