Appropriation (2026/27 Estimates) Bill

Thank you, Madam Speaker. The Appropriation Bill for 2026/27 is a necessary dose of fiscal reality. It recognises quite plainly that New Zealand cannot keep spending as though global interest rates are a temporary inconvenience or that inflation will politely disappear if we just invest a little more. This bill puts discipline back at the centre of public finance, and not a moment too soon. This bill also keeps debt on a sustainable path. With global interest rates elevated, borrowing recklessly is not visionary, it is expensive. Every extra dollar borrowed today is a dollar future taxpayers must repay tomorrow, often with interest that could have funded hospitals, classrooms, or police. This is why this bill reins in baselines, trims low-value spending, and focuses on programmes that actually deliver housing outcomes rather than headlines.

Healthcare will certainly be a winner in this appropriations Budget, including the three nights for post-natal stays for new mums; law and order; education; infrastructure; defence; and, of course, the Cambridge to Piarere Expressway, fully funded. The Treasury estimates that for every billion dollars invested, 5,500 more jobs will be created. Some will call that “austerity”; most New Zealanders call that “finally living within our means”. It is remarkable how controversial that idea becomes only when applied to Governments rather than households.

This bill is not flashy, it is not fanciful, and it certainly does not pretend that fiscal gravity has been repealed. It is a steady, factual, responsible plan to stabilise the books, rebuild resilience, and ensure New Zealand is better prepared for global shocks without reaching for the usual shortcut of taxing New Zealanders harder. It funds core services, strengthens front-line delivery, and requires agencies to demonstrate value rather than simply demand it.

For some members opposite, that may feel like a cultural shock. After all, their approach for years could be summed up in three familiar steps: announce it, fund it, and when the bill arrives, tax it. This Government has taken a different view. No new taxes, no surprise taxes, and no creative rebranding of taxes as levies or contributions. Just responsible management of the taxes New Zealanders already pay. This is the work the public expects of us, and this is exactly what the Appropriation Bill delivers.

Thank you, Madam Chair, and thank you to the chair of the Finance and Expenditure Committee for a reference to the select committee report. During the select committee Estimates hearing, we heard from the Minister of Finance in relation to jobs, infrastructure, a number of the items within the Budget that have been paid for or cut—or savings, as the Minister would say—as a result of Government decisions.

I want to start with questions—first, in relation to jobs. The Minister has said that the Budget would create 220,000 jobs. What is the increase in the working-age population over that same period, and how many of those jobs have actually been made as a result of Budget 2026 decisions?

This was addressed in the select committee hearing. What I said—to clarify; once again paraphrased incorrectly by that member—was that what the Budget forecasts, according to Treasury’s analysis, is that over the forecast period, 220,000 more jobs will be created in the New Zealand economy. Of course, partly that does relate to population growth, but it is also supported by a range of policies, including baseline fiscal discipline which mitigates the corrosive effects of inflation, but also a range of policies which support economic growth and therefore job creation—including, for example, reform of the Resource Management Act, fast-tracking of major developments, the Investment Boost tax policy, and a number of other policies besides.

So how many actual jobs are attributed to Investment Boost in the last year?

Again, that matter was traversed at select committee. As the member should know from her time at the Inland Revenue Department, the full tax year to which Investment Boost applied has only just ended, and as the member will know, it takes a year after the completion of a tax year for final returns to be filed because most New Zealand taxpayers use a tax agent. Therefore, we do not yet have the data about how many people claimed Investment Boost in the year previous.

What we do know is that Investment Boost supports businesses who have made capital investments by allowing them to deduct 20 percent of the cost of that investment from their final tax bill, meaning it reduces the tax that they pay. What we also know is that the Inland Revenue Department (IRD) and Treasury assess that a policy of this sort will encourage more investment than would otherwise be the case, affording both greater rates of economic growth and greater rates of wage growth. It is the analysis of IRD and Treasury that the major benefactors of increased investment that Investment Boost will drive will be New Zealand workers.

I mean, I note the Minister’s comments that, obviously, this was traversed during the select committee process. It goes to the exact same point as to why I need to ask the question again, because when I just heard the Minister’s answer, she couldn’t actually address the actual question I was asking her. I was asking her for the actual number attributed to those changes. I do understand the Minister has minimal knowledge of the tax system, given she needed a provisional tax briefing very early in her term; however, she would know provisional tax is by a third—is within particular thirds. So my question is to the Minister: again, how much has actually been attributed? The actual number. We wouldn’t have to come into the House again and ask those questions if we had not got proper answers at the time. So that’s why we’re having to use the House’s time again to ask those same questions.

Well, Madam Chair, it’s very early in the Estimates debate for the Opposition member to have taken a cup of Mr Hipkins’ nasty juice. However, what I can clarify is that you don’t need a PhD in tax, like Deborah Russell has, you don’t need years of experience at IRD, like Barbara Edmonds has, to know this: if you impose more taxes on businesses, they will have less revenue available to them to invest in new job creation and higher wages for their people. That is why our Government is proud to support Investment Boost—the first effective tax reduction for businesses in far, far too long. That sits nicely alongside the policy that we continue to deliver on, which was the first adjustment to personal income tax rates for workers in more than 14 years—a policy change that that member opposed. So I can only take it that she would rather New Zealanders were paying more tax right now.

I’d just like to correct the Minister. My PhD is not in taxation; I’d like the Minister to withdraw that allegation!

I withdraw and apologise!

Hon Barbara Edmonds: Going to some of the Minister’s comments around commitments—

CHAIRPERSON (Maureen Pugh): Excuse me. Can I just explain to members in the Chamber: I need to give you the call because the cameras are operated remotely off site and the sound booth needs time to switch the mics, which is the purpose of me giving you the call. Honourable Vanushi Walters.

Hon Barbara Edmonds: Vanushi Walters—I’m Barbara Edmonds.

CHAIRPERSON (Maureen Pugh): Sorry, Barbara Edmonds.

I know we have the same haircut, but anyway. Thank you, Madam Chair. Going, now, to where a large amount of savings had come through from the Budget; it had come through Public Service reprioritisations. On a number of occasions, the Minister of Finance has committed to not cutting front-line services—she made that commitment back in 2023, she has made it throughout this term of Government. Does she still commit to no cuts to front-line services, given that there’s going to be a 2 percent, a 5 percent, and a 5 percent reduction in the number of Government agencies?

Well, in addressing that question, there are two points I’d like to make. The first is that I think it is incumbent on all members of this House who wish to be custodians of other peoples’ money that they work very hard to earn and then pay tax to us for, that we ensure we are always looking for ways to get more bang for their bucks, that we are always looking for ways to enhance productivity and delivery of public services so that the impact we are getting from every dollar is enhanced, not diminished, over time. That is the right goal for any Government to commit itself to. In this year’s Budget, our Government has absolutely committed ourselves to that goal by ensuring that we are not going to put an ever-growing cascade of public money into the back-office functions of public agencies, but are instead going to require them to live within their means and, indeed, live within New Zealand taxpayers’ means. In the absence of that effort, what we would be having to do is increase taxes on New Zealanders, and that is not a course our side of the House is prepared to take.

The second point I’d make is this, and it’s one that I’ve made in the course of many debates with that member over the past few years, which is her definition of what a front-line service is may differ from mine, which is to say that she would, for example, probably define the billions of dollars her Government invested in consultancy reports and contractors as somehow being front-line service delivery. Well, our Government proudly stands by the fact that we have capped and reduced the amount of spending on consultants across public agencies. That member would probably define all sorts of things as front-line service delivery which we would say, “Well, actually, no, those aren’t making a difference to New Zealanders and the outcomes they expect.” We see front-line services as those things needed to deliver core targets like lifting educational achievement, reducing waiting lists in the health system, ensuring fewer victimisations across the law and order system, and across all of those things we are getting better results as a result of driving more accountability for public money.

Thank you, Madam Chair. Well, then, given her definition of a front-line service cut is very different to Chris Penk’s, who regretted the fact that one of the local social services providers in Mahurangi and Kaipara, where he is currently the MP, has had to shut because of Government cuts to public services, the North Shore Women’s Centre has had to close as a result of Public Service cuts, what public services—given the cuts that are going to be coming of 2 and 5 and 5 percent consecutively—does she believe are not a front-line services? Especially given that it’s quite clear a number of community service providers who are funded through the Government sector have had cuts and have had to close as a result of her decisions.

Well, we simply think it is possible for the Government to organise its own functions better. We don’t think that there is some rule set in stone that what you must have is 29 separate departments with 29 separate IT functions, 29 separate payroll departments, 29 different brands, and 29 different layers of chief executives and deputy chief executives. Instead, we think, actually, to the extent that those agencies can be streamlined and organised around the delivery of services to New Zealanders on the front line, they should be. So that’s one source of efficiency and reduced spending that we see.

We also think the public agencies who may, in some cases, still be dependent on paper in a digital age, would be able to get more effectiveness and more efficiency by using modern digital delivery and systems which allow fewer hours to be spent on tasks to deliver administrative functions. Those are two ways that we see that there can be more efficiency and productivity in the Public Service.

I’d also point out that the corollary of what that member is putting to the committee is that she’s saying what must happen is there must always, in every Budget, be a large shovel used to dig more money of the pockets of New Zealanders to throw into the Public Service, because it must never be expected to do more with less. On this side of the House, we proudly say, “Actually, just as every household and every business in the country are always looking at their budget to say, ‘Hey, how could we ensure that we can get more impact, that we’re putting dollars in the right places?’, so too must Government.”

I think perhaps a good place to start is where the Minister just left us, where she was talking about Governments of all stripes, actually, needing to make decisions on taxation and on spending. I think that that is a broader philosophical debate which has very real-world, practical implications for New Zealanders, when different approaches are taken by Governments of different stripes. We here on this side of the House—the Green Party, in particular—very strongly believe in collective investment in the things that can increase our productive capacity as a country and increase our resilience.

To that effect, I just want to pick up on something which the chair of the Finance and Expenditure Committee said in his opening statements. He noted and, I think, implied that on this side of the House, we seem to believe that “inflation will disappear if we just invest a little more”. I think the member would hopefully understand that there are different types of investment. There are indeed types of investment that can reduce our exposure to imported inflation—the likes of imported inflation which our economy is currently suffering as a result of our exposure to fossil fuels.

Here I would just once again put on the public record that the Green Party actually wrote to the Minister of Finance and to the Prime Minister when the fossil fuel crisis first hit, seeing imported inflation on the horizon as a result of our economy’s exposure to fossil fuels, imploring the Government to work with us to reduce that very exposure which would otherwise result in the imported inflation which we are now currently seeing. The Government is actively blaming the fossil fuel crisis for the inflationary figures and the unemployment that we are seeing at this rate, and the cost of living that New Zealanders are experiencing, but there are opportunities for the Government to make investment to actively reduce that exposure to imported inflation.

To that effect, I actually just want to pick up on few things that this Government has actively decided to invest in and pulled its foot off of the lever to withdraw investment from, particularly the likes of renewable energy. Here, the Government will point to the fact that we have seen a lot of consenting of renewable energy projects, so let’s just let the market do what it needs to do. However, if we were to apply that logic across the board, then the Government should not be investing hundreds of millions of dollars in subsidising new fossil fuel production, nor potentially—

David MacLeod: Firming.

CHLÖE SWARBRICK: Oh, if we want to talk about firming, for the members opposite, there are renewable versions of firming which would actually increase our sustainability and resilience, and, again, reduce our exposure to imported fossil fuel inflation. At the end of the day, my question, actually, for the Minister of Finance is something which I think is in all of our interests to understand, particularly in the lead-up to the election: does the Minister have any intention at all, or can she categorically rule out any potential taxpayer underwriting of the liquefied natural gas import facility that the Government has stated that it intends to move ahead with?

Thank you, Madam Chair. Minister of Finance, a key factor in your Budget that you tabled this year was a $2.4 billion in projected savings that were a result of losing almost 9,000 jobs in the Public Service. I understand that chief executives have been asked to provide plans to the Minister by August, and I wanted to ask if the Minister had an update on the amount of money that has been retained by her as a result of these job cuts, and also if she’s able to tell the House what job roles are going to be affected by these cuts.

Well, the member is conflating two separate exercises. The first exercise is about the reduction of baseline expenditure set out in the Budget estimates. The second exercise is about restoring the Public Service to the size it has traditionally been, which is to say 1 percent of the population. Now, it blew completely out under the last Government, who thought there was never a problem that couldn’t be solved by taxing people more or hiring a few hundred public servants, and so we are now undertaking an exercise to ensure it is restored to its traditional size at about 1 percent of the population.

Now, we’ve set that target to be achieved over a number of years, so it is a gradual consolidation rather than something that will be achieved overnight, and therefore we expect to hit interim milestones along the way. Yes, the member is right: public agencies have been asked to put forward their plans for ensuring that they keep within these headcount reductions over time, and I have not actively considered those proposals as yet.

Thank you, Madam Chair. To the Minister of Finance, I just want to turn now to the $450 million contingency that was in the Budget for possible further measures in response to the conflict. Obviously, when we discussed this back in May, things were a lot more recent, and we’ve now had several months pass. Just want to know if the Minister has an update on what plans, if any, there are to spend that contingency money.

The Minister told us, and it’s reported in the Finance and Expenditure Committee report, that the Government wanted to be able to implement further targeted, temporary, and timely responses if needed. This was in the context of talking about higher oil prices, inflationary pressures, and interest rates that would be factors when the contingency was used. Now that we are in August, can the Minister please give us an update on what the plans are with that $450 million contingency?

I stand by all of the statements I have made in relation to that contingency, which was a prudent measure by the Government to ensure that we were well positioned to react to what were inherently, and remain inherently, uncertain global events. As the member doesn’t appear to have any subscriptions available to her to international newspapers or Google, I’m happy to report to her that since the Budget has been delivered, what we have seen is both an escalation in events in the Middle East but, subsequently, further moves towards ceasefire.

The global oil price, which had spiked, has come down and spiked and come down again. Today, the price of petrol is sitting just over $3 a litre in New Zealand, diesel at about $2.70 a litre. At this juncture, the Government doesn’t judge that additional temporary supports are required, although a number of temporary supports do remain in place, including additional in-work tax credits for working families on low incomes hit by higher fuel prices, and including increases to mileage rates for a range of public servants, including relief teachers and those who are required to travel between patients for their healthcare work.

So has any of the contingent of that $450 million contingency been drawn down, and if it has been, what was it drawn down for? I do note to the Minister of Finance that these are serious questions, and it is precisely because of the changing nature of the conflict in the Middle East that these questions are being asked, and this House needs to understand that this is a very large—nearly half a billion-dollar—contingency that was sitting in Budget 2026. It was discussed at the Finance and Expenditure Committee. I think we could just have some answers to the questions around that. Google is something I think most members of this House know how to use, Minister.

Well, if the member had asked that question, I would have answered that question. The answer is no, there have been no drawdowns.

Has Cabinet or Cabinet committee considered any uses of the contingency, and additional to that, has the Minister of Finance received any advice on how that contingency may be used?

I just want to revert briefly to the discussion raised by my colleague Camilla Belich around the cuts to the Public Service. The Minister of Finance, in explaining some of the cuts that were going on there around the baselines, was with a view to reverting to the traditional size of the Public Service at around about 1 percent of population. That may well be the traditional size, but tradition is not always a good reason for doing something. Could the Minister please explain why 1 percent is thought to be the appropriate size for the Public Service? Surely, the size of the Public Service depends on the services it has to deliver, not on a particular percentage of population. So, if the Minister could tell us why that is an appropriate size rather than just a traditional size.

Well, we have ourselves a philosophical question, and I do wish to know from the member at some point what your PhD is in. I’m sorry that I misrepresented you earlier. I’ve always presumed it was taxation because I know you were a tax lecturer, and I presumed your lecturing related to your PhD, so I look forward to finding out.

Look, the philosophical point actually sits within this Government’s fiscal strategy, where we’ve also looked over time to ask ourselves the question: what is the appropriate size of Government? Because let’s be clear, the bigger Government is, the more resources it takes from the pockets of workers and from businesses and industry to spend on its own business, the fewer dollars are available for those same workers, business, and industry to go about their business. We accept on our side of the House that, yes, dollars are required to provide essential public services—a good health system, public infrastructure, and educating our kids—but what we don’t accept is the socialist premise that the way to nirvana is to ever expand the size of the State.

If we look back over time in New Zealand, the size of Government has proportionately been roughly 30 percent of the economy. We’ve set ourselves a fiscal target to get it back there. It is the case that under the last Labour Government, it went from around 27 percent to 34 percent in just six years, which shows you the alarming trajectory they would take us on. The reason, philosophically, we are uncomfortable with an ever-expanding State and an ever-expanding Public Service is because of the corollary it represents, which is: the only way to feed an insatiable State is to tax people more. You don’t need a PhD in tax, Dr Russell, to understand that; that if the Government just keeps growing, that means that workers need to give more of their very hard-earned wages to the tax man or the tax woman.

Our position is that, actually, New Zealanders probably need more of their own dollars in their own bank accounts to meet their own household needs, and make their own decisions about whether they invest in their children, whether they invest in their homes, what they invest in their lives, and the more dollars we take, the fewer choices they have about how they go about it. We set ourselves discipline, and we say, actually, let’s get the Public Service about where it’s been, which is 1 percent of the population, and let’s get Government spending about where it’s been—30 percent of GDP. Let’s not take the lazy path of just allowing Government to balloon, and deciding that every wasteful spending idea that pops into our head, whether it’s a cycle bridge across the harbour or a light rail train set—not every whim needs to be indulged.

Thank you, Madam Chair. I was interested in the discussion before around Investment Boost, because, given some of the forecasts, it’s clearly a very important policy. I understand that Investment Boost is projected to lift real GDP by about 1 percent over 20 years, with half of that coming in the first five years. I was interested in the Minister of Finance’s analysis of what would happen if Investment Boost was removed. What impact would that have on the Government forecasts and the ability for the Government to provide the revenue for the spending commitments that it needs to make for our public services?

The member asks a very good question, because, as parties put together their manifestoes and fiscal plans, they’d better be careful about counting in growth that will not occur in the absence of Investment Boost, because what Treasury and the IRD estimate is that half of the GDP growth that Investment Boost is estimated to stimulate will occur within the first five years of that policy. In the absence of Investment Boost, therefore, you would expect half a percentage of GDP growth to be wiped off this economy over the forecast period. With less growth comes less revenue, and in terms of growth, we are talking about having GDP billions of dollars less than it would otherwise be, meaning a significant hit to revenue.

Now, of course, on the other side of the House, what they like to pretend is that you can just tax people more and there are no consequences. In the case of Investment Boost, the consequences of removing it would be very real. We would see a lower rate of capital investment than would otherwise be the case, lower productivity growth, lower GDP growth, and lower wage growth—

Hon Dr Megan Woods: Of what uptake?

Hon NICOLA WILLIS: —with those effects most pronounced in the next five years. I put it to that member that that’s why this is such an important policy to maintain, because our economy absolutely needs that stimulus to wage and job creation over the next few years.

Just reverting to an earlier discussion: for the benefit of the Minister of Finance, my PhD is actually in philosophy—the study of argumentation and logic—and it’s very helpful for noticing when people are obfuscating and not answering questions. I’d just like to point out that the Minister has not yet answered my colleague Chlöe Swarbrick’s question about the liquefied natural gas terminal, the Minister has not yet answered my colleague the Hon Dr Megan Woods’ question about the drawdown on the contingency, and she has not yet answered my question on why 1 percent is considered to be the appropriate size for the Public Service.

CHAIRPERSON (Maureen Pugh): Chlöe—

Hon Nicola Willis: Madam Chair, you don’t need a philosophy degree to look at—

CHAIRPERSON (Maureen Pugh): I’m sorry, but I had started to call Chlöe Swarbrick.

It’s very interesting: we’ve just had the Minister of Finance agree with the Green Party that without investment, there is no growth. I guess that this is where there is that kind of dividing line where we have the opportunity to meaningfully invest in the things that will increase our productive capacity as a country, and also to reduce our exposure to imported fossil fuel inflation. I really, really want an answer from the Minister of Finance here, because I think it is critical for the sake of future infrastructure planning for us as a country, but also to that point of resilience and sustainability, and our exposure to imported inflation: can the Minister please make it absolutely clear to the committee that we are not potentially, at election time, going to be faced with a situation where this Government has decided to underwrite the liquefied natural gas import facility with taxpayer money?

A revelation that I hope can occur in this House today is that Chlöe Swarbrick will recognise that the Government is not the only source of investment in the New Zealand economy. In fact, the biggest investors in the New Zealand economy are actually in the private sector, which is why it is so important that we have in place policy settings that encourage them to make that investment, and the means we have available to us for doing that are multiple, not the least regulatory. For example, the Fast-track Approvals Act will allow major investments to be made in renewable energy generation and housing and in quarries that would otherwise not be able to occur. By regulating more carefully, we can ensure that billions of dollars of investment are unleashed in the private sector.

The second way that we can encourage the private sector to invest is ensure that they actually retain some of the profits of their investment, which is why things like having a wealth tax are a dumb idea, because what that says to them is “Take your dollars elsewhere.” So let’s head that moment of comity in the committee of the whole House today—that we can agree that private sector investment is important to the New Zealand economy.

In answer to the member’s question, as has been stated by the Minister for Energy multiple times: the liquified natural gas investment is still subject to a procurement process and no final decisions have been made.

Thank you, Madam Chair. [Authorised reo Māori text to be inserted by the Hansard Office.]

[Authorised translation to be inserted by the Hansard Office.]

Moving to the Māori economy: does the Minister stand by the Government’s commitment to double the Māori economy by 2035? If so, why have Māori economy’s sales fallen 10 percent, exports have fallen 17 percent, and 1,070 jobs have disappeared in a single year, with Māori employment now at 10.8 percent? What tangible investment can the Minister point to that is going to turn around the 2½ years of decline that the Māori economy has seen under this Government’s watch?

Absolutely we are committed to our ambitious goals for the Māori economy, and let me point out to the member some of the sources of that growth. Actually, the Māori economy has a significant proportion of land-based and primary industry - based businesses, which are undertaking, at the moment, an export boom. We are seeing higher prices for our diary, for our meat, for our kiwifruit, and for our apples, and we are seeing more of those products being sold overseas. Our Government is supporting that, not only by reducing the red tape that farmers need to untangle themselves from before they plant a single vine, but we are also ensuring they have access to new markets. I want to acknowledge the member’s party for supporting the New Zealand - India free-trade agreement, which is an important part of that.

Māori businesses will also be significantly supported by the Investment Boost tax credit, which will ensure when they make investments in their own growth, whether that’s in a piece of machinery, a piece of technology, they will pay a lower tax bill that year as a result. So, yes, we remain committed to growing the Māori economy. We are committed to policies that support Māori firms and businesses to invest, create jobs, and grow incomes.

We’ve just had what I think is actually quite an explosive admission from the Minister of Finance just then, when she said that no final decisions have been made and, in fact, she was pretty ambiguous about whether there is the potential for there to be a taxpayer underwrite to the tune of $1 billion for a new liquified natural gas (LNG) import facility just a few months before the general election. If that were to happen, that would bind our country to more fossil fuel imports and, therefore, expose us to more imported fossil fuel inflation into the future. But, look, if the Greens were to be taking the National Party election strategy here in the way that they seem to contort every single piece of information about tax policy or economic strategy, we here would be putting up in billboards and lights the fact that the National Party is going to be investing $1 billion of New Zealander’s money in a new LNG import facility, just to really underscore exactly how profoundly insane the situation is that we are in this election, with the lack of willingness to engage honestly and truthfully about the economic propositions that are before us as a country.

So given that the Minister of Finance clearly so desperately wants to talk so much about tax, let’s talk about what the Green Party is actually putting on the table in contrast to the tax system and the economic strategy that this Government perpetuates and upholds, and, yeah, with regard to the time that is available to us, let’s be really clear that what this Government has spent its time doing has been entrenching deep wealth inequality. Right now, they know that the average hard-working New Zealander—our hairdressers, our waitresses, firefighters, nurses, teachers, doctors, and almost every regular person who is tuned into this debate—is paying double the effective tax rate of the wealthiest in this country. But it’s clear who this Government serves, and it is not regular, hard-working New Zealanders, whom this Government sees as an opportunity to underwrite their billion-dollar LNG import facility to the detriment of all of us and of a safe, stable climate for future generations.

CHAIRPERSON (Maureen Pugh): Is there a question?

Well, I mean, the only explosive thing about that was the explosive volcano that is unleashed when the Greens get the chance to talk about their list of taxes. Let her count the ways. Look, as the Estimates clearly show, there has been no taxpayer funding commitment made to a liquefied natural gas facility, nor could there be when no final decisions have been made to advance one, because it is subject to a procurement process. There’s nothing explosive about that. If the member wants to take more opportunities to list all of the new taxes she wants to introduce to drive investment and jobs away from this country, she is welcome to take as much time as she likes, because I’ll tell you what: that sort of economic recklessness and vandalism is not what the New Zealand people want.

Point of order. I’m seeking leave of the committee to have extra time afforded to the Green Party for the sake of us having that meaningful, evidence-based tax debate.

Hon Member: No.

Hon Nicola Willis: No.

CHAIRPERSON (Maureen Pugh): Well, let me put it. Leave is sought for that purpose. Is there any objection? There is.

Thank you, Madam Chair. I’m just returning to my questions and reminding the Minister of Finance that, outstanding, we had the questions around whether or not any advice has been received, or whether any Cabinet committee or Cabinet has considered any uses of the $450 million contingency fund that sits in the Budget. The other question I would like to ask the Minister is: has she had any update from IRD around Investment Boost and around the 1 percent increase in GDP growth that is forecasted as a result of that policy over 20 years and whether she’s had any updated advice on that 1 percent? She’s saying—and indeed a number of the documents and certainly the documents accompanying the Budget said—that you could expect some of that growth to be front-loaded in the first five years and that it wouldn’t fall in a linear way, the 0.05 percent per year, if you annualised it over 20 years. So, if she can give us some updates within the first five years about how it will perform against the linear path of 0.05 percent growth, and, likewise, in terms of the projections around wage growth from Investment Boost, which is a 1.5 percent increase in wages over 20 years. I think most workers sitting out there would be looking for something more than a 1.5 percent over five years growth in their wages, but this seems to be the only policy that this Government and this Budget is hanging its hat on in terms of anything to do with wage growth and in terms of making life better for workers. So, if the Minister could give an update of any advice she has received in terms of the filings and how that is tracking and what that looks like.

I’m sorry I have to spell this out to the member, but that is wage growth additional to the wage growth that would otherwise occur. It’s not the only wage growth that will occur, but it’s wage growth that you can bet your bottom dollar won’t happen if Investment Boost is withdrawn. As to Treasury and IRD’s estimates of the impacts on GDP growth and wage growth, all of the advice that I have received stands by those estimates. It’s very important to note that it is a matter of comparing what would have otherwise been the case, and that is difficult to do. As I have highlighted, we have not yet had the full year’s tax returns for a year of Investment Boost, so we don’t have the data. Even if we had the data, it is difficult to know how much of that investment would otherwise not have occurred.

What we do know is that in the absence of this policy, New Zealand businesses would be paying more tax. If they were paying more tax, they would have fewer dollars available to them for paying their workers and making investments in their own growth and expansion. You can cut it 50 ways, you can talk about your percentages and your incremental and your linear, but if you’re getting rid Investment Boost, you are taxing businesses more. This investment credit is worth $6.6 billion to New Zealand businesses over the forecast period, and in its absence, those businesses would be paying $6.6 billion more in tax. That tax would be, in the case of the Green Party, spent on phantom, crazy, fantasy projects; in the case of the Labour Party, probably wasteful Government spending. Our argument is a simple one: let those businesses retain more of their earnings so that they can make investments in their own workers, their own technology, and their own expansion, and strengthen the New Zealand economy.

So, based on that response by the Minister, if you rewind Investment Boost, it therefore increases the tax impost on a business. What are the tax savings, therefore, from the year, given businesses pay provisional tax?

Cushla Tangaere-Manuel: Madam Chair.

CHAIRPERSON (Maureen Pugh): Cushla—

Hon Barbara Edmonds: Supplementary. Quite clearly—

CHAIRPERSON (Maureen Pugh): I’d started to call the member Cushla Tangaere-Manuel.

Thank you, Madam Chair. Has the Minister requested or has Treasury provided any advice on the 10 percent fall in Māori authority sales and the loss of 1,070 jobs; if yes, will the Minister release it and, if no, why has she not requested that information?

In answer to the member’s question, no, I’ve not received advice on that matter. In addressing member Edmonds’ questions, let me spell it out again for the member, because I don’t think she has understood it the first, second, or third time I’ve explained it. The Investment Boost was introduced on 22 May 2025 and was, therefore, applied for the first tax year through to 1 April 2026. We do not know how many people claimed the Investment Boost tax credit in that year for a simple reason, which is that most firms in New Zealand use a tax agent to make their tax claims and have up to 12 months after the tax year to make those claims. As is always the case, the majority do not make their tax filings until a year after the completion of the tax year. The simple reason that the member’s questions can’t be addressed in factual detail is that the claims have not yet been made.

Hon Barbara Edmonds: Well, “the majority”, you said.

Hon NICOLA WILLIS: Now, the member can mutter under her breath as many times as she likes that she doesn’t know. Well, the IRD do not have that information yet, because people haven’t made those claims yet.

I just want to help the Minister out here. It is the case that terminal tax claims have not been filed and things like that, but provisional tax returns will have been coming in on an ongoing basis—the provisional upfront payments that businesses make during the year—and so that provisional tax data ought to be giving some indication of whether Investment Boost is actually being used and what kind of an impact it is having on the final tax paid—

Hon Shane Jones: No, no, no, no.

Hon Dr DEBORAH RUSSELL: Trust me. I know about the tax system. There ought to be some data available. I would also like to point out that, as the Minister referred to herself when she was in front of the select committee, there was some survey data from Inland Revenue. The final set of that data was due to be coming in in about April, and there should have been reports back on it by now. There ought to be at least some evidence available, both from that survey data and from the provisional tax payments that have been coming in, to give the Minister an indication as to how effective Investment Boost has been. Where is that information, Minister?

Well, it’s a sad Wednesday afternoon when a Labour Party member has her hand on her hip and says, “Trust me. I know about tax.” You know what follows. I can tell you what she knows about tax. In her view, more is always better. I’m afraid that the member and I are not going to agree on this point, because the simple reality is that the Investment Boost tax credit has been introduced. Yes, the survey data indicates that a significant proportion of firms have brought forward investments they wouldn’t have otherwise made or expanded investments, and a significant proportion in the survey data indicated that they had or intended to use Investment Boost. However, that is survey data. For the final information, we do need the final tax returns. It is the case that IRD have ensured that those tax returns include a data field which asks people to identify the volume and value of investments that they made that they claimed the Investment Boost tax credit for. We will know that data after the fact. We just simply do not have that data at this point. I can tell you one thing definitively and clearly: as a result of the Investment Boost tax credit, businesses in the last tax year will have paid less tax than would have otherwise been the case. The member can wish that away, or she can just be clear and candid, which is that she wants businesses to pay more tax.

It is quite clear, when you have a Minister who says they’re going to save a significant amount of tax and yet the member just before asked, “Well, how much?”, that she doesn’t actually know. The Minister doesn’t actually know. No idea. Therefore, given there was a survey—and we’ve read the survey—I want to ask the Minister: of that significant proportion that have actually changed their investment decisions because of Investment Boost, how much was that percentage of those that actually did the survey? From my understanding, only 7 percent of those that did the survey said it was significant, and 53 percent said that Investment Boost doesn’t actually affect them.

Therefore, if the Minister is claiming they don’t know how much yet from Investment Boost and yet was asked just before how much it was—she said, “We don’t know yet, because the filing data.” Well, which particular filing data are you talking about? Are you talking about the IR10, the annual financial statements, or are you talking about their provisional tax, which is done three times a year? I’m getting a bit confused by the Minister here because she’s conflating a number of different filing obligations in order for us to get the information around how effective Investment Boost is, given her claims that it will have significant impact on them. Yet a survey result shows the complete opposite of that. Can the Minister provide the House with the answer to how much has actually been drawn down from Investment Boost for the last year? Her comments that the majority—you don’t know? Well, then, what is the minority, if you do know that?

I’m very happy to address the member’s question, although I’d suggest that she’s given me a spade with which to dig a hole she is going to fall into. What the IRD did was they threw forward estimates of the amount of investment that would be made by firms and how much their tax bills would be reduced in each of the years in the forecast period. The amount of less tax that businesses will pay per year as a result of Investment Boost—let me spell it out to the House: in the 2024-25 year, $208 million less in tax; in the 2025-26 year, $1.830 billion less in tax; in the 2026-27 year, $1.6 billion less in tax; in the 2027-28 fiscal year, $1.7 billion less in tax; in the 2028-29 fiscal year, $1.3 billion less in tax.

Now, the corollary is also true, members. If Investment Boost were removed, let me tell you how much more tax businesses would be paying. Well, this very fiscal year they’d be paying $1.6 billion more in tax. Next year, they’d be paying $1.7 billion more in tax. In the 2028-29 forecast year, they’d be paying $1.3 billion more in tax. What kind of a finance spokesperson would promote that if they want to grow this economy?

I would like to—[Interruption]

CHAIRPERSON (Maureen Pugh): Just a minute. I can’t hear myself think.

Hon Dr DEBORAH RUSSELL: Thank you, Madam Chair. Of course, the point of Investment Boost is that it accelerates the depreciation right off, so it brings forward a write-off—20 percent in the first year—and then it decreases the write-off in subsequent years. Given that the Minister has said that businesses will pay X amount less in tax in the immediate years as a result of Investment Boost, how much extra tax will they be paying in the out years as a result of the decrease claims they can make in those years? The Minister needs to be clear that this is a cash-flow advantage only. Oh, the Minister doesn’t know. Perhaps I’ll sit down, and someone else can take the call.

Well, if you ask a silly question, expect an answer that will be very simple for the member to understand, which is this: the Investment Boost tax policy reduces people’s tax bills in the forecast period, meaning that the time value of money is significant and they have more funds available to them in the short term than would otherwise be the case. What IRD and Treasury advise is that, as a result, they will have more cash available to them to do the following things: pay their workers more, invest in more equipment, expand their growth, send their products to new markets, and do any number of things which will be good for the economy overall. Here’s the thing: rather than imposing new taxes and increasing taxes, another way that you can increase revenue is by growing your economy more by growing your businesses more. The Investment Boost tax policy will allow businesses to grow faster, and we say that’s a good thing.

That was interesting. While the Minister waits for a text from her adviser to provide the answer for Dr Deborah Russell’s question, the question I have in relation to the last year, therefore—given that the Minister has said that Investment Boost will provide more employment—is: how many jobs have come online as a result of that Investment Boost, given her claim and given unemployment is now at a 11-year high? The fact is that it’s supposed to bring in more employment, and yet unemployment is higher. How many additional jobs in the last year, therefore, given the Minister’s claims have been brought on as a result of Investment Boost?

Hon James Meager: It’s under 3 percent in Otago; 3.7 percent in the South Island.

Hon BARBARA EDMONDS: Sorry, what was that, James Meager?

CHAIRPERSON (Maureen Pugh): The debate isn’t across the Chamber, members.

Hon BARBARA EDMONDS: He was just trying to correct me. My question is: given unemployment figures, how many more jobs have been added into the economy as a result of Investment Boost decisions and businesses accessing Investment Boost?

We’re now entering the dregs of the debate where we enter endless repetition. I repeat two points that I’ve made ad infinitum. The first is that it will be difficult to disaggregate the effects of Investment Boost from any of the other wonderful, pro-growth policies which this Government is implementing, from advancing fast-track developments to implementing new free-trade agreements to reducing red tape and regulation and to better educating our school leavers. That would be a difficult number for any serious scientist to come up with.

The second point is this: in terms of how many claims have been made using the Investment Boost tax credit, we will not know that until the final tax returns are in.

Well, seeing as the Minister doesn’t really want to explain anything further around Investment Boost, I want to go to some of the general economic figures. Perhaps the Minister could explain this. I have, sitting here, the Pre-election Economic and Fiscal Update (PREFU) from 2023, and at that time, the forecast GDP growth for the 2026 year was 3.3 percent, but sitting here in the Budget Economic and Fiscal Update (BEFU) from this year, the year for which the Minister has been responsible, it’s 1.2 percent. Could the Minister explain the difference in those figures and why, under her watch, growth is much, much lower than it was going to be under the watch of the previous Government?

While she’s at it, perhaps she could explain why, in terms of the operating balance before gains and losses (OBEGAL)—they’re not actually reporting the OBEGAL figure, because they’ve gone to her own special little operating balance before gains and losses, excluding ACC revenue and expenses (OBEGALx) figure. With OBEGALx compared to OBEGAL, it shows that there was a considerable decrease in OBEGAL from when the Labour Government was in charge until when she’s been in charge.

We could add, to that, inflation. Inflation was due to be down at about 2.1 percent in PREFU 2023, and, now, under that Minister’s watch, inflation for the 2026 year is predicted to be something like 4 percent—well out of the band.

Let’s do it one more time with some other sets of figures. We always knew unemployment was going to be trouble and difficult for a few years, but by this time, according to PREFU 2023, unemployment would be starting to track down. It would be at 4.8 percent, but on her watch, unemployment is sitting at 5.5 percent, and that’s without taking into account all the New Zealanders who have fled overseas. The Minister needs to explain why things are so much worse on her watch.

As we have traversed at the Finance and Expenditure Committee and as the Treasury have acknowledged, their forecasts at Pre-election Economic and Fiscal Update 2023 were overly exuberant, and they subsequently pulled back their productivity expectations and their growth expectations. Essentially, in their analysis, they overestimated the bounce-back after COVID, and as the real data came in, they then adjusted their forward forecasts. In addition, we have of course had a global tariff war and the biggest oil shock in recent history. In terms of what the economic indicators show, under the last Government, core Crown expenses went from 27.3 percent in 2018 and leapt to 33 percent in 2024. On our watch for the only year for which we have final figures, which is the 2025 year, those expenses reduced to 32.6 percent. In terms of debt, debt was 19.5 percent in 2018. Under the last Government, it had more than doubled to 41.7 percent by 2024.

Despite the ravages and the challenges of the global economy, and despite the massive interest bill that we inherited from the last Government, which is now totalling around $9 billion a year, on our watch, debt has only increased in the final year for which actual figures are available—2025—by 0.2 percent: going from 41.7 percent to 41.9 percent, which I think the member will acknowledge is a far lower level of growth than the 19.5 percent to 41.7 percent that Grant Robertson managed to achieve.

CHAIRPERSON (Maureen Pugh): Members, the Minister’s time in the chair has come to an end.

Committee of the whole House—Estimates Debate

Local Government

CHAIRPERSON (Maureen Pugh): We now have the Minister of Local Government, the Hon Simon Watts. The Minister is available to speak to that portfolio from 5 p.m. until 5.40 p.m.