Budget 2026: No 'lolly scramble' from 'grown-up' Budget - Luxon

Prime Minister Christopher Luxon says Thursday's Budget will be a "grown-up" one and free of any "lolly scramble", unlike those produced by Labour Party "babysitters".

Appearing on Morning Report on Monday, Luxon said New Zealanders should expect a "fiscally responsible" approach from the coalition.

"We know we can't spend, tax and borrow, which is a mistake of the past," he said. "We also know that hard austerity is not the way forward either."

Reminded that the coalition was continuing to borrow and increase debt, Luxon said the government needed to find a "balanced way through" to bend the debt curve down "over time" without sacrificing frontline services.

Luxon picked up the same message, albeit with a more casual vernacular, in his regular interview with Newstalk ZB.

"You have to get the show gripped up, you have to be financially responsible, be the grown-ups and the adults here, having taken over from the babysitters," he said.

"Get it cleaned up, sorted out. And that's just a year-in, year-out discipline."

Asked whether the Budget would contain any surprises, Luxon teased "a few more" announcements to come, but again stressed the focus on discipline.

"You can't have a lolly scramble in the financial straits that we're in at the moment."

Earlier this month, Willis said the government would bump up its day-to-day spending, also known as the operating allowance, by $2.1 billion - lower than the $2.4b which had been forecast. For comparison, in 2022, Labour's Grant Robertson set his operating allowance at $5.9b.

Willis, however, also signalled a sizeable increase in expected capital expenditure - one-off spending on projects like roads, schools and hospitals - up from $3.5b to $5.7b.

Last week, she announced plans to slash most government agencies' operating budgets, beginning with a 2 percent cut in the coming year, to recoup savings of $2.4b over four years.

The Ministry of Foreign Affairs (MFAT), however, escaped the 2 percent reduction, with its minister Winston Peters rebuffing Finance Minister Nicola Willis's calls for restraint.

Willis said MFAT would face two back-to-back cuts of 5 percent in later Budgets, though Peters said he did not consider himself bound by that.

Asked about what ZB host Mike Hosking called a "scrap-ette", Luxon said all ministers wanted more resources, but the government was "holding the line pretty tight".

"I'm sure it's never enough for the minister of foreign affairs," he said. "But equally, we've been pretty decent, I think, and found a good way through."

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