Budget 2026: What’s in store for New Zealand’s business leaders?

The Government has signalled that Budget 2026, to be revealed 2:00pm this Thursday 28 May by Finance Minister, Hon. Nicola Willis, will focus on supporting the delivery of core public services such as health, education and law and order, whilst keeping a tight control of discretionary government spending. Supporting this, the Government has communicated that it wishes to get its books back into surplus in 2028/29; earlier than is currently forecast. 

Given current global geopolitical challenges, the fiscal backdrop, and also in light of the various musings about New Zealand’s structural fiscal problem - which will get worse with an aging population and the associated health and superannuation costs – the Government has limited options to respond to some of the leading business issues highlighted in the latest BDO Business Performance Index (BPI) report.

On top of the external headwinds of economic and political uncertainty, the May BPI report reveals that business leaders are grappling with tight cash flow, supply chain disruptions, and soft sales pipelines. Fewer than two in five leaders are positive about their cash flow position or supply chain reliability, and a similarly low share are optimistic about future bookings and demand.  

However, pre-Budget commentary suggests that the Government will also be funding a limited number of priority policy commitments, such as developing a sustainable pipeline of infrastructure investments and addressing the country’s longer-term productivity challenges. 

BDO Tax Partner and Budget Commentary Lead, Alan Scott, due to attend the Budget day media lockup in the Beehive, explains what he’d like to see included to support Kiwi businesses:
 

“Rather than bold moves, I would like to see clear signals that despite the array of current uncertainties, the Government is making clear and considered moves to set up the economy for success in the coming months and years.”

In general terms, Alan believes the Government should continue to find ways to make it easier to do business in New Zealand - whether that be by simplifying tax obligations for small businesses or providing additional options for businesses under stress.

He adds:

“While there’s no money available to do it, one area that is often a cause for debate and concern is the impact of fiscal drag. Fiscal drag occurs when income tax thresholds are not automatically indexed to inflation, which has increased average tax rates and therefore tax revenue since 2010. Any changes to thresholds are expensive and would likely need to be funded from savings obtained elsewhere, so this is unlikely to feature in Budget 2026.”

Alan expects that in Budget 2026 the Government will continue to provide additional resources to Inland Revenue for tax compliance and collection activities. Experience shows that Inland Revenue gets a good return on every dollar spent investigating taxpayers, and with the current headwinds and various challenges, including things like cryptocurrency, Alan expects more IRD resourcing in this area.  

NZIER Chief Executive, Jason Shoebridge, expects Budget 2026 to reflect a highly constrained fiscal environment, with limited scope for new spending. 

Against this backdrop, the Government is expected to prioritise fiscal discipline, avoiding measures that could fuel inflation or increase debt levels. As a result, any new initiatives will likely be funded through reprioritisation of existing programmes, alongside a greater focus on low-cost policy changes such as reducing regulation. For businesses, this points to a Budget focused more on managing pressures than delivering broad-based financial support.

 

BDO’s Budget day coverage

For leading insights and commentary on the impacts of Budget policy announcements for your business, watch the BDO website and LinkedIn for our Budget Day coverage after 2:00pm on Thursday 28 May.

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