Budget 2026: Labour fumes as Government ‘secretly’ spends $1b from next year’s Budget
Finance Minister Nicola Willis presenting the 2026 Budget. Photo / Mark Mitchell
The Government has quietly pre-allocated just over a billion dollars from next year’s Budget, but is refusing to say where that money is going.
The Budget for 2026, published last month, dictates where money for the 2026/27 fiscal year will be spent.
However, a note buried in Treasury’s Budget Economic and Fiscal Update (Befu) revealed that a portion of Budget 2027 had been quietly pre-committed by the Government.
That spending is just $22 million in the 2027/28 fiscal year, but rises to about half a billion dollars in each of the years following, working out at $1.05 billion in the four-year forecast period beginning this year – about $300m on average for the years in which the money is spent.
The spending is a considerable portion of the $2.4b operating allowance that Finance Minister Nicola Willis has set herself for the next Budget.
That pre-allocation has frustrated Barbara Edmonds who, as finance spokeswoman of the country’s most popular party on current polling, stands a better chance than some of her predecessors in Opposition of becoming a minister and actually delivering a Budget.
She has hit out at what she calls the secret spending of the next Budget.
“Nicola Willis secretly included $300 million in the Budget that is pre-committed to something that she won’t name, and can’t tell us what it is,” Edmonds said.
“That’s on top of $450 million in uncommitted funds that she can essentially use as a slush fund ahead of the election,” she said, referring to a contingency fund the Government set aside to deal with unexpected consequences of the fuel crisis.
A spokesman for Willis said the funding relates to “an initiative that is under active consideration, which is why it has not yet been made public”.
The spokesman said policy work was “currently underway to determine whether the funding is still required”.
“Either way, details of the contingency will be disclosed ahead of the election in the Pre-election Fiscal and Economic Update,” he said, referring to the name of Treasury’s next set of forecasts, which will be published before the next election.
A Treasury spokesman said “an average of $0.3 billion per annum of the Budget 2027 operating allowance has been pre-committed, leaving $2.1 billion per annum on average remaining from the Budget 2027 operating allowance to allocate in the future”.
“The reason the amount of funding available disclosed in the table below are [sic] lower in the last two years reflects the cost profile of the initiative which has been funded.
“The initiative in question is sensitive in nature, so there is no further information available in the Budget documents.”
Willis’ spokesman noted it has recently been more common to pre-commit funding from future Budgets.
The last Labour Government pre-committed future Budget spending to health in Budget 2023 and to justice and natural resources in Budget 2022.
However, the current Government has voiced scepticism of this type of budgeting, unwinding the pre-commitment “clusters” and voicing scepticism about renewing health’s multi-year funding when it runs out at the end of the current Budget.
Edmonds defended Labour’s pre-commitments.
“In Budget 2023, when Labour had pre-commitments, we set out what areas they were for. Nicola Willis and National aren’t being straight with the public,” she said.
“New Zealanders deserve more transparency and a Government that they can trust.”
Multi-year spending that bridges gaps from one Parliament to another raises questions about whether one Parliament can bind another to its spending decisions.
Willis’ office disagreed that this was happening, saying: “Budget allowances are tools to support the Government to achieve its fiscal strategy and to communicate its fiscal intentions to the public.”
“They do not bind future governments and Parliaments”.
Nonetheless, it is likely that for the spending to be included in the Budget document, Cabinet had agreed to the initiative to an extent that Treasury believes the spending is likely to occur.