Budget 2025 to Focus on Growth, Legal Reforms, and Smarter Spending

Finance Minister Nicola Willis announced that the next budget will be delivered on May 22, promising a focus on long-term economic growth, legal and regulatory changes, and thoughtful spending decisions.

In a recent tweet, Willis dubbed it the “Growth Budget,” a shift from last year’s more subdued approach. She emphasized that the government is taking a fresh direction, aiming to break down barriers that hinder job creation and economic development in New Zealand.

“This Budget won’t just be about spending and savings,” Willis told the Finance and Expenditure Committee. “We’re introducing new legal and regulatory measures to remove obstacles that prevent growth and wealth creation.”

A Shift Beyond Traditional Budgets

Unlike previous budgets that largely focused on allocating spending, Budget 2025 will broaden its approach. While Willis didn’t spill any details about specific legislative reforms, she hinted that these changes would provide a more comprehensive strategy to stimulate growth.

When asked whether reforms to the Reserve Bank’s capital requirements would be included—something both the Act and Labour parties have called for to help small businesses access credit—Willis kept it vague. “I can’t give away all the surprises,” she said with a smile.

Limited New Spending

The Government faces tight financial constraints this year, with just $700 million available for new spending after essential services are funded. Willis acknowledged that tough decisions lie ahead as ministers decide which new initiatives are worth pursuing and where cuts can be made.

“We want to maintain a medium-term approach to balancing the budget while avoiding drastic tax hikes or severe spending cuts,” she said. “Both extremes would harm New Zealand’s growth and financial security.”

Labour Questions New Fiscal Indicator

Barbara Edmonds, Labour’s finance spokesperson, pressed Willis to explain why she introduced a new fiscal indicator, OBEGALx, despite Treasury’s advice against it. The new measure excludes ACC’s self-funded operations from the government’s income-versus-spending calculations.

Documents revealed that Treasury had “strongly recommended” sticking with the previous measure to maintain transparency.

Willis defended the decision, saying Treasury agreed it was logical to exclude ACC’s short-term impact but advised against it due to concerns about public perception. Treasury Secretary Ian Rennie is now reassessing fiscal indicators and considering further changes.

What’s Next?

Willis expressed optimism that the early months of 2025 will bring thoughtful solutions and legislative reforms to boost New Zealand’s economy. “This isn’t just about a budget — it’s about creating a stronger, more resilient future for all Kiwis,” she concluded