Finance Minister unveils NZ Budget 2025. the end of a era Smith & Caughey closes and Trump, Ramaphosa in heated Oval Office exchange.
“Show me the money,” Finance Minister Nicola Willis thundered at the Labour benches in her last big Parliament speech before Budget Day 2025.
She was not channelling Tom Cruise, who memorably uttered the line in the 1996 film Jerry Maguire, and whose latest Mission Impossible is now in theatres, but her former boss, Sir John Key, who hurled the same question at Phil Goff during the 2011 election campaign, derailing him.
In the final days before the Budget, Willis has been turning the heat on Labour for its flip-flopping on setting a debt ceiling of 50% of GDP, a figure committed to by Finance Minister Grant Robertson in 2022 on the back of advice from Treasury.
Over the weekend, Labour’s finance spokeswoman Barbara Edmonds told the Post Labour would keep to that ceiling — and was still committed to its 2023 promise of returning the books to surplus, under the old measure, by the end of the decade.
These commitments would be a challenge to Labour on the current forecasts, which would require an awful lot of cutting or taxing to return the books to surplus by the end of the decade, which was not a promise explicitly made in 2023, but what the party’s plan said would transpire.
On Tuesday, Labour leader Chris Hipkins appeared to walk back the remarks, saying they were backward-looking and related to the party’s 2023 fiscal plan. On RNZ’s Morning Report, he wouldn’t commit to sticking to that debt ceiling or surplus target in the party’s 2026 election campaign.
“We’re asking the question the wrong way round. The question we have to ask is not how much are we willing to spend but what are we trying to buy,” Hipkins said.
“Simply setting an arbitrary spending target without consideration of what New Zealanders want us to provide is getting it the wrong way round,” he said.
Labour leader Chris Hipkins (right) and finance spokeswoman Barbara Edmonds speaking ahead of the Budget. Photo / Mark Mitchell
We asked whether he would commit to that 50% cap, Hipkins did not give a direct answer.
Willis seized the opportunity, putting out the first of two press releases this week on National Party letterhead, rather than her usual Minister of Finance letterhead.
Her last of these, released on Wednesday, said Labour was having “struggles with economic policy”. She accused Hipkins of “publicly undermining” Edmonds by telling a podcast that Edmonds’ comments about the debt cap related to the party’s 2023 policy and not the one that he will take to voters in 2026.
The imbroglio, during which the Government decided to use up some of its Budget week media oxygen to mount a brutal attack on the Opposition, capped off one of the most tightly fought Budget build-ups in years.
Cuts to new spending, savings from pay equity
This began in April, when Willis announced she would be slashing the amount of new discretionary operating spending to $1.3 billion from $2.4b, saying everything beyond that $1.3b envelope would need to be funded by savings elsewhere, adding that “billions” of dollars worth of these savings had been found.
The law change, retrospective and passed under urgency, energised Labour and put the Government under immense pressure. It led to almost a week of the Budget build-up derailed by a discussion on the c-word.
The change will result in a large protest against the Budget at Parliament, beginning shortly before the Budget is read. The union movement, which is organising the protest, released a list this week of the 33 pay equity claims that had been lodged under the prior regime and will now need to be restarted.
They include teachers, support workers, education advisers, Ministry of Education psychologists, service managers, four categories of kindergarten workers and early learning teachers, Kōhanga Reo kaiako.
When Revenue Minister Simon Watts late on Tuesday announced the Government had dropped a digital services tax, which would levy a small charge on the New Zealand revenue of tech giants such as Google and Facebook, Labour pounced again.
“The message from this Government could not be clearer: if you’re a woman seeking equal pay, or a family trying to get the FamilyBoost payment that was promised to you, then you don’t matter,” Edmonds said.
“But if a wealthy corporation comes asking for help, they will bend over backwards to give them a break – at your expense.”
The change is likely nothing to do with the Government’s fondness or otherwise for tech giants, but out of a desire not to incur the wrath of US President Donald Trump, who had threatened tariffs on countries that imposed digital taxes such as the one Watts binned.
Frustratingly for Willis, the tax would mean a $400-million-odd hit to the books – and the change was made early enough to be incorporated in the current Budget, meaning she would have needed to find additional savings to keep her surplus on track.
Defence was a big winner, getting $12b by one count. Education Minister Erica Stanford secured $100m for expert maths teachers and maths tests at primary and intermediate schools, while Willis announced a half-billion-dollar top-up for New Zealand’s subsidies to the screen industry and $75m for pro-investment tax changes.
There are still big things to come. Willis revealed in a pre-Budget interview with the Herald that something in the Budget was considered to be so beneficial to the country’s growth trajectory that Treasury had revised its growth forecasts upwards because of it.
Whether the good feeling engendered by that growth is enough to save the Budget from the bad feeling created by the surprise pay equity rollback will be the big story of the coming weeks and months.
The Key Government delivered some tighter Budgets in its first term and roared to re-election in 2011, partly by painting Labour as irresponsible fiscal managers.
Willis’ invocation of Key’s famous phrase on Budget day eve suggests this Government may be hoping for a similar effect.
The full list of pay equity claims halted by recent reforms
Education
Teachers (preschool and early childhood education is a funded sector)
Support workers, youth workers in residential schools, Education Service
Education advisers (learning support) Ministry of Education
Ministry of Education employed psychologists
Ministry of Education employed service managers
Funded Education
Kindergarten administration
Kindergarten cooks
Kindergarten teacher aides
Early learning teachers
Kōhanga Reo kaiako
Tertiary Education
Tertiary education library assistants
Tertiary education administration and clerical
Public Service
Public Service administration and clerical Claim 1
Public Service administration and clerical Claim 2
Corrections psychologists
Corrections probation officers and senior practitioners
Funded Health
Social service workers (five NGOs)
Primary practices and urgent-care centre nurses
Primary practices and urgent-care centres admin/medical receptionists
Care support workers 1
Care support workers 2
Care support workers 3
Frontline managers and co-ordinators
Plunket nurses
Plunket administration
Community midwives in primary birthing units
Hospice nurses and healthcare assistants (nurse practitioners, RNs ENs, HCA)
Access community nurses/total home care/Nurse Maude
Labtests Awanui
Aged residential care nurses
New Zealand Artificial Limb Service
Sexual Wellbeing Aotearoa
Local Body
Librarian and librarian assistants in councils
Do you have questions about the Budget? Ask our experts – business editor at large Liam Dann, senior political correspondent Audrey Young and Wellington business editor Jenee Tibshraeny – in a Herald Premium online Q&A here at nzherald.co.nz at 9.30am, Friday, May 23.
