The Government’s 2025 budget, titled the “Growth Budget,” will be announced on May 22. Prime Minister Christopher Luxon and Finance Minister Nicola Willis are preparing a plan that will centre on enhancing economic growth and productivity, while tightly controlling public spending.
The Government aims to move away from what it calls “wasteful spending” by the previous Labour administration. The budget will focus on legislative reforms, targeted social investment, and infrastructure development, all while maintaining strict control over public spending.
A Budget Focused on Economic Growth
Entering its second year in office, the Government is placing economic growth at the heart of its agenda. In his first speech back in Parliament, Prime Minister Christopher Luxon highlighted a “growth agenda” as the foundation of his economic strategy.
Finance Minister Nicola Willis reinforced this vision, declaring: “Budget 2025 will be squarely focused on ensuring New Zealanders can earn more in the years ahead by growing our economy.”
She also pointed out that the Budget will “go beyond the traditional Budget focus on spending and savings initiatives,” aiming for “bold steps to support economic growth, including measures to address New Zealand’s long-standing productivity challenges.”
Key Areas of Budget 2025
1. Improving Productivity and Economic Growth
The Government’s Budget 2025 will include a set of legislative and regulatory reforms aimed at removing barriers to job and wealth creation. These steps are designed to address New Zealand’s persistent productivity challenges, with a commitment to go beyond traditional economic strategies and foster sustainable growth.
“The Government intends to introduce several legislative and regulatory measures at the Budget focused on removing barriers that hold back job and wealth creation,” Willis stated.
2. A New Social Investment Strategy
Budget 2025 will bring a major shift with the introduction of new social investment measures aimed at improving the results from taxpayer-funded social services.
The Government asserts that this approach is more efficient than the previous Labour Budgets, which, according to Finance Minister Nicola Willis, were “almost exclusively on agencies spending more.”
3. Commitment to Fiscal Responsibility and Spending Controls
A key priority in Budget 2025 will be maintaining strict fiscal discipline, with the Government committing to fund only essential priorities while managing financial pressures without excessive borrowing.
Finance Minister Nicola Willis emphasised, “We take seriously our responsibility to chart a path out of a spiral of deficits and debt left to us by the last government.” The Government regards fiscal responsibility as fundamental to securing economic stability and preventing a future debt crisis.
4. Long-Term Investment in Infrastructure
The Budget will also focus on developing a sustainable pipeline of infrastructure projects. The Government sees this as crucial for balancing economic expansion with responsible investment in key sectors such as transport, energy, and housing.
Other Key Areas of Focus
Budget 2025 will also target:
- Cost-of-living pressures
- Improvements in health and education services
- Strengthening law and order
Political and Economic Context
The Government’s economic strategy for Budget 2025 signals a break from Labour’s policies, focusing on fiscal discipline in the face of falling interest rates and ongoing economic challenges. The critical test will be whether it can deliver tangible improvements while keeping national debt in check.
Finance Minister Nicola Willis has positioned the Budget as part of the Government’s “fiscal repair job,” necessitated by Labour’s past spending decisions.