Budget 2025: Overview from Vine
30
May
2025
Budget 2025
Budget 2025 – dubbed ‘The Growth Budget’ by Government – includes new spending, savings, and reprioritisation of frontline services with a $1.3 billion operating allowance per annum, which is the lowest allowance in a decade.
There is no new funding earmarked for family violence or sexual violence services.
Minister of Finance Nicola Willis said in a Budget press release:
“Budget 2025 responds to New Zealand’s long-term challenges with initiatives to boost growth, investment and savings; targeted investments in the essential services and infrastructure New Zealanders rely on; and reforms to fix financial holes in the government’s books.”
It aims to stimulate economic growth through initiatives such as the Investment Boost tax incentive, increased employee and employer Kiwisaver contributions, targeted Working for Families support, funding uplifts for health services, investment in education, police, courts, defence, capital infrastructure, and a new Social Investment programme.
A full summary of initiatives can be found on the Treasury website.
Social investment
Budget 2025 sets aside $275 million for the government’s social investment approach, including a $190 million Social Investment Fund for better outcomes for New Zealanders in need. It will invest in at least 20 initiatives over the next 12 months using a different contracting approach than Government agencies usually use.
Minister for Social Investment Nicola Willis said in a Beehive pre-Budget release:
“The Fund is about more than new money. It’s about Government investing earlier, smarter and with much more transparent measurement of the impact interventions are having for the people they are designed to help. The Fund will invest in services that deliver measurable improvements in people’s lives, guided by data and evidence. It will support both new approaches and strengthen existing services that work, to improve the Government’s return on investment and change vulnerable people’s lives for the better.”
According to the Social Investment Agency's website, social investment is an approach to allocation of resources, investment in services, and a method of delivery for social improvements. It aims to help individuals and communities thrive long-term through early intervention and prevention rather than crisis response. When considering how to target interventions, it looks across multiple areas of a person’s life to take a holistic view of the path forward. Resources and interventions focus on those who need them most to create the greatest impact.
Key changes from existing model:
- Service providers can contract to produce outcomes, rather than specific outputs, which allows for more community partnership, innovation, and flexibility when targeting the problem
- Communities are empowered to take a greater role in local social support, reducing demand for government services
- Improved use of data and community insights informs expected outcomes and impacts when commissioning.
The SIA website states that Social Investment Fund Ministers will set the priority outcomes and settings for the Fund in June 2025:
“The Fund will open in August 2025. We expect initial Fund outcomes to align closely with Government’s targets and existing cross-cutting strategies such as the Child and Youth Strategy and the Family Violence and Sexual Violence Strategy and Action Plan.”
The first three initiatives funded by the Social Investment Fund are:
- Autism New Zealand’s early screening and intervention programme that provides services and support for family/whānau, caregivers and professionals.
- Ka Puta Ka Ora Emerge Aotearoa’s evidence-based approach to tackling youth offending and truancy that will help at least 80 families each year to address youth offending and truancy; and
- The He Piringa Whare programme with Te Tihi o Ruahine an alliance of nine hapū, iwi, Māori organisations and providers that will support 130 families at a time with a wraparound service that delivers stable housing, education, training and employment, and other services.
Access to justice
The Budget has allocated $480 million of additional funding for frontline policing.
The courts, tribunals, and legal aid will receive $246 million to clear the court case backlogs and improve better access to justice for victims. Justice Minister Paul Goldsmith told The Post: "Justice delayed is justice denied. Waiting months or years for a case to be resolved only adds to the frustration and trauma for victims and, indeed, all court participants."
$472 million will be dedicated to managing prison growth from stronger sentencing laws.
Children and young people
The Government has emphasised its intention to address serious youth offending with $103 million funding for Youth Justice facilities, military-style academies, and the implementation of the new Young Serious Offenders regime. Minister for Children Karen Chhour said in a press release: “We continue to want better for, and from, these young people. This is not just an investment in facilities, it is an investment in them.”
“There is no evidence that military style academies will benefit the young people or make communities safer by reducing re-offending. What these measures fail to do is address the underlying cause, and what led them down that path in the first place.”
She noted the government had more work to do implementing the recommendations from the Royal Commission of Inquiry into state care. “The inquiry highlighted the need for loving, nurturing early intervention and a move away from custodial care.”
Some commentators have also expressed concern that this Budget makes little progress on child poverty.
“Let’s be clear [that positives in the Budget] are small scale and are not going to flip the dial to relieve the suffering faced by children and whānau today. This is not the bold investment required to build the foundation for a thriving future.”
Chief Children’s Commissioner Dr Claire Achmad said in a press release from Mana Mokopuna:
“Today’s Budget is a missed opportunity for the Government to show that bold leadership, so that children today don’t grow up in poverty, meaning better lives both today and tomorrow… For mokopuna Māori, as well as mokopuna whaikaha and Pacific mokopuna, the impacts of things like food insecurity are even more extreme.”
Others noted that some benefits, like the increased abatement threshold for Working for Families ($42,700 to $44,900) are offset by other policies like means-testing of the first year of Best Start, where families earning just $79,000 will start to lose the previously universal entitlement to financial support during a newborn’s first year of life.
Chief Executive of the New Zealand Council of Christian Social Services (NZCCSS), Alicia Sudden, said that while there were some positive elements in Budget 2025 including Accommodation Supplement boundary updates and Working for Families abatement threshold increases, “this comes at the expense of new parents and fails to make positive progress on child poverty.”
Young people will be directly financially affected by reductions Government contributions to Kiwisaver (to $260.72 annually) while employer and employee contributions rise to 3.5% from April 2026 and 4% from April 2028. The Government will extend the government contribution to 16 and 17-year-olds from 1 July 2025, and extend employer matching to 16 and 17-year-olds from 1 April 2026.
Crown response to abuse in care
Despite key recommendations from the Royal Commission and the Redress Design Group, the government opted to invest $774 million into the current redress system instead of establishing a new survivor-led compensation scheme. It also omitted redress for abuse in faith-based institutions.
Erica Stanford, Lead Coordination Minister for the government’s response, said that the government faced a difficult choice to either spend more time and money on a new scheme, or to invest more in the existing scheme. “For Budget 25 we have prioritised improving the current system as quickly as possible for survivors and investing in changes that have a direct impact for them.”
Funding provides for workforce capacity building, improved inpatient unit safety and privacy, initiatives to prevent entry of children and vulnerable adults into care, Oranga Tamariki safeguarding improvements, oversight of compulsory mental health and addiction care, and Disability Support Services.
“What should have been a day of celebration turned into a day of disappointment for me and I’m sure many others… That investment is wasted. It’s a major slap in the face for the Royal Commission of Inquiry and their recommendation.”
Survivors who have already received payments prior to the change are eligible for top-up payments to their settlements. More information can be found on the new government website here.
Māori
Māori Wardens and the Māori Women’s Welfare League received a share of $14 million increased funding (alongside Pasifika Wardens) to expand their community services including volunteer training and administrative support.
Spinoff Ātea editor Liam Rātana (Ngāti Wairupe/Ngāti Kurī) wrote in an opinion piece that:
“The government has touted over $700 million in funding for Māori. But when you strip out the reallocated funds and examine what’s actually new, the real number is closer to $38m. Meanwhile, more than $750m in Māori-specific initiatives have been axed.”
Professor Matthew Roskruge (Te Atiawa, Ngāti Tama), director of Te Au Rangahau, told the Spinoff that “Māori were virtually invisible” in this Budget. “There’s little here that speaks to Māori priorities or the Māori economy.”
Te Kāhui Tika Tangata | Human Rights Commission expressed concern that:
“This Budget doubles down on successive reductions to Māori initiatives which are estimated to add up to around $1 billion over the last two years” and reflects a movement of funds from Māori-led initiatives into general funds “undermining the ability of Tangata Whenua to exercise tino rangatiratanga and amounting to erasure of their experience of structural inequity”.
Ethnic communities
The Budget has not delivered any new targeted funding for ethnic communities, despite the size of the ethnic population growing. Vishal Rishi, chief executive of The Asian Network Incorporated, told RNZ that he had hoped to see targeted funding to aid family harm prevention efforts, maternal mental healthcare and maternal care for Asian communities – but none of these items featured in Budget 2025.
Pay equity
Changes to the Equal Pay Act 1872 have reduced the expected cost to the Crown of future pay equity settlements. These amendments are forecast to save $12.8bn over four years and contributed to the funding of Budget 2025.
“The significant savings to the Government will come from the pockets of women working in jobs that are undervalued.”
In an article in The Conversation, University of Auckland academics Jennifer Curtin, Gay Marie Francisco, and Mohammed Salimifar noted that alongside the radical restructure of pay equity claims for undervalued women-dominated occupations, women may not immediately benefit from the government’s Investment Boost initiative due to the gender-segregated structure of the labour market.
Changes to pay equity legislation under urgency resulted in protests around the country. During a rally at Parliament, Te Riu Roa | New Zealand Educational Institute president Ripeka Lessels said the lack of engagement with stakeholders played a major role in mobilising the protest:
“Kāre rātou i paku whakapā mai ki a mātou, anei ō mātou nā hiahia, me kōrero tahi rā tātou. Korekau. I haere rātou ki roto i te rūma, he tere rā te whakautu, te urgency, ka mutu.”
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