New Zealand to increase capital investment in 2026-27: Luxon
Sydney (13 May)
The New Zealand Government will spend NZ$5.7 billion on capital investment projects in 2026-27, up NZ$2.2 billion from its original Budget plan, because of increased infrastructure, defence, and social services investment, Prime Minister Chris Luxon said today.
“The recent [US-Israeli war in Iran] has acted as a timely reminder that significant levels of capital investment will be required in the coming years,” Luxon said at a pre-Budget speech in Auckland.
Luxon confirmed that the Government will invest in schools, hospitals, the New Zealand Defence Force, and infrastructure projects in its 2026-27 Budget during the speech.
But the Government will spend $2.1 billion on operating expenses in 2026-27, down NZ$300 million from its original plan, Luxon said. It plans to invest in essential services, like healthcare and education, but cut spending in other areas, Luxon added.
The New Zealand Government will scrap its fees-free scheme – which waives tuition fees for many final-year university students – and instead support trades education in its 2026-27 Budget, Foreign Affairs Minister Winston Peters told Newstalk ZB on 8 May.
Prime Minister Chris Luxon and Finance Minister Nicola Willis have since confirmed Peters’ comments.
Ending New Zealand’s fees-free scheme could reduce the Government’s net operational spending by NZ$237 million per year, according to Treasury advice from 2024. The policy change would minimally impact learner participation but increase student debt and the long-term cost of tertiary study, Treasury said.
The Government’s operational spending will also include funding for its temporary Iran war-related relief package announced on 24 March. The Government increased New Zealand’s in-work tax credit by NZ$50/week in April to help 140,000 working families handle high fuel costs. The programme could cost the Government up to NZ$373 million.
The New Zealand Government will announce its full spending plans for 2026-27 when it releases its Budget on 28 May.
By Avinash Govind