Steven Joyce: Former Finance Minister previews Budget 2026, backs public sector cuts
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What are the key highlights of Budget 2026?
A big week for New Zealand in cash rate call today, as we've already talked about. Tomorrow's the budget. There's less than no money in operating allowance of $2.1 billion. There will be savings, of course, so therefore a reprioritisation of spending. But essentially, she's as tight as, and it's election year, so how to handle it. Stephen Joyce has been there and done that, and he's with us. Morning to you. Morning, Mike. How are you? Very well, thank you.
How is the government planning to manage public sector cuts?
Is it any easier if you've got no money at all? So therefore, the decision is sort of made for you?
Well, it's easier from the sidelines, I'll tell you that. The... Look, it's sort of in a way, because Bill English used to say, well, you know, the toughest budgets are the ones where you've got some money, because everybody wants it. And by everybody, he means every minister. It's quite clear that there's no money this time. There probably won't be money for the next two times. So it's all about reprioritisation. And that'll be the story of this week. And clearly it already is, because... The government's sought to clear the decks by announcing some of the tougher stuff last week so that they can free up a bit of headroom for the things that they're going to announce, what they'll be putting money into on Thursday, I would say.
What do you reckon's coming? Is there something there? Is there a rabbit or is it just what we will expect?
I expect that it'll probably be more bread and butter things like education and health. and I have no reason for believing that except that my sense is that would be what the public would support. I think they'd be a bit sceptical of too many gimmicky things and this is not the time for that. I think they'll be wanting to know that they're their core public services, education and health, public safety, are being looked after.
What does Steven Joyce say about public service job increases?
And when you look at those, and you've got to add defence in these days, right? And that's a big one that we hardly ever talk about, but that's going up and it has to go up. So once you've taken those three or four out of the lot, there's less than none left, which is why they're doing the things that they need to be doing, frankly, on reducing the size of the public service, the core public service, In other words, the administrators and the policy people.
Do you regard the... And I talked to Nicola Willis about this the other day. When they came to office, they had a crack at the public service and they cleared out about 2,000, which seems to have been next to nothing, and they're having another go. Was that a missed opportunity? Should they have gone harder and sooner, or have they done it about right?
I think you could make the argument that they should have gone harder sooner. Certainly at the time, I remember saying... Basically, since 2017, we've gone from 49,000 up to 64,000 core public servants. And I don't think anybody would say they've noticed much in the way of increased output. And that's tough for those people. Many people within the public service will say all it has done is increase the churn and the number of meetings and how many people you have to talk to before you can do something and all that sort of thing. So I think that you can make the argument that that should have been done earlier.
How will the budget impact health and education funding?
All I can think about, and again, I have no internal knowledge of this, all I can think about is that potentially, as is often the case with coalition governments, the things you think should have happened quicker... perhaps were the subject of negotiations between parties, and that slows you down.
Who's winning the battle in the these times are tight and these are the things we must do to rectify the situation versus the other side who would have you spend and borrow and do all of that? Who's winning this battle, given its election year?
Well, I think the public know that there's not a lot of money to throw around. And so any party that in the selection campaign says, ah, well, this will do this and we'll stop doing this and we won't tell you how it's going to end up till afterwards, will be looked upon pretty sceptically.
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Chapters
7 chapters
1
What are the key highlights of Budget 2026?
0:00–0:20
2
How is the government planning to manage public sector cuts?
0:20–1:41
3
What does Steven Joyce say about public service job increases?
1:41–3:03
4
How will the budget impact health and education funding?
3:03–4:51
5
What challenges are faced by the government in an election year?
4:51–6:04
6
How does coalition politics affect budget decisions?
6:04–6:55
7
What are the implications of rising national debt?
6:55–7:20
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