Above all else, what Nicola Willis and Chris Luxon are doing in the 2026 Budget is taking from poor and middling folks and giving to the rich, who also happen to be National and ACT’s main political donors. More precisely, Budget 2026 continues to maintain comparatively low tax rates on corporate profits and high incomes, no tax on capital gains and wealth, and tax breaks for the rich, while imposing high rates of tax on low and middle incomes. 32 percent of the total tax take comes from the highly regressive consumption tax that is GST. Because the rich spend much less of their income on consumption than those on low and middle incomes, GST benefits them while disadvantaging everyone else. While Budget 2026 cuts most areas of social spending in real terms, it places an increasing proportion of the burden of funding the welfare state onto the working class. It is a class war budget.
A Government of the Rich, by the Rich, for the Rich
To understand this Government’s approach to economic management and policy-making, it is important to recognise four things. First, even by the unrepresentative standards of previous National governments, the composition of the current National caucus is remarkable. 90 percent of National’s MPs come from: business (40 percent), farming (19 percent), law (15 percent), accountancy (6 percent), and high professions (10 percent). Men make up 68 percent of the caucus. The overwhelming majority are Pākehā. This is a government of the rich, by the rich, for the rich.
Second, political donations to the National and ACT parties during the 2020s have reached record levels. In the two years leading up to the 2023 election, National and ACT received $21,843,310 of declared political donations compared to $9,074,148 for the Greens, Labour, and Te Pāti Māori combined. According to the Electoral Commission, in 2025 National and ACT received $8,720,489 from their rich backers, even more than in 2022. This compares to donations of $4,393,905 for the centre-left parties. By the time of the 2026 election, National and ACT will have received the highest level of campaign donations in New Zealand’s political history.
Third, based on this funding, business enjoys extensive access to, and influence over, this Government. This has been exemplified by the dodgy secret lobbying by Fonterra, Z Energy, and others, that led to the Government legislating to prevent court cases against polluting corporations. The Greens, Labour, and climate change activists correctly criticised the Government for the obvious corruption involved. But even more revealing is the fact that the prime minister’s chief policy adviser at the time was Matt Burgess – a former economist with the NZ Initiative. The NZ Initiative is a far-right think tank funded by New Zealand’s largest corporations that advocates extreme neoliberal policies such as savagely reducing social spending while cutting taxes on corporations and the rich. Little wonder that Luxon didn’t want to “go into names.”
Fourth, the close relationship between the NZ Initiative and Luxon, with Matt Burgess acting as a conduit for policy ideas, shows that this Government is not only extremely right-wing on social issues, being the most socially reactionary government in the neoliberal era, but is also reviving and applying a version of neoliberalism that harks back to the period from 1984 to 1993, when Roger Douglas and Ruth Richardson were finance ministers.
Tax Breaks and Social Spending Cuts
The Government has plenty of money for corporate welfare, giving a $2.9 billion tax cut to residential property investors in its 2024 budget, and a $1.7 billion per year “investment boost” tax break in its 2025 budget. It also has plenty of money for defence (increasing it by more than $12 billion), prisons, police, and fossil fuels. But when it comes to social spending there is, according to the Government, a need to make savings.
In fact, an examination of Treasury’s forecast for government spending from 2026 to 2029 in the Core Crown Expense Tables, shows that the Government is planning on driving through large cuts in major areas of social spending during this period. For example, factoring in Treasury’s forecast of four percent inflation for 2026, there will be funding shortfalls (to even maintain the current inadequate levels of funding) in social welfare ($43 million despite rising unemployment), public housing ($209 million despite the highest-ever level of homelessness), education ($739 million), tertiary education ($183 million), and environmental protection ($99 million). These spending cuts are just for 2026–2027. Even larger cuts are forecast for 2028 and 2029.
Fiscal austerity of this nature will only intensify the cost-of-living crisis, housing crisis, poverty, unemployment, chronic cumulative underfunding of the public health system, declining participation in tertiary education, gender inequality in paid employment, and the inadequacy of government responses to the ecological crisis.
Budget 2026 and Election 2026: Polls, Voting, and Class Struggle
One of the most remarkable aspects of Budget 2026 is the extent to which it rests on the Government’s apparent confidence that it will win the 2026 election. Willis proudly proclaimed that it deliberately avoids an election-year “sugar hit.” The polling indicates that it has not been politically popular. This comes as no surprise given that the Government’s policies overwhelmingly favour a small rich minority while doing nothing for the majority of working-class New Zealanders.
As we have seen, National and ACT have lots of money on their side. But the economic recovery that Treasury had forecast in 2025 for the second half of 2026 has vanished due to Trump’s war against Iran. Now it is forecasting a surge of inflation, falling real wages, rising interest rates and mortgage payments, and stagnant house prices. This is creating the opposite of an economic “feel-good” factor for the 2026 election. In view of this, National, ACT, and NZ First will increasingly engage in reactionary politics focused on social and cultural issues such as transgender rights, Te Tiriti issues, diversity and inclusion policies, and so forth.
As well as using campaign funding to boost online political messaging, the Government and its rich supporters have been making management changes in traditional media outlets to ensure more favourable treatment of the National and ACT parties. For example, in the public sector, the Government replaced the board and CEO of TVNZ. Following pressure on the RNZ board by David Seymour, chief executive Paul Thompson was replaced. In the private sector, Matthew Hooton, a right-wing political strategist closely associated with the National and ACT parties, was appointed as boss of the Post by Stuff Media owner Sinead Boucher. These are just a few examples from what has been a concerted campaign to ensure a more compliant media.
Despite having a vast amount of campaign funding, National has been polling from 28 percent to 32 percent for most of 2026. Labour has been enjoying a five to six percent lead. This is despite Hipkins’ strategy of marketing Labour as “National-lite,” obviously modelling his leadership on the right-wing Labour leaderships of British Labour PMs Tony Blair and Keir Starmer. Given the lacklustre performance of the Government, Labour should be enjoying a much larger lead. Nonetheless, the polling indicates that the governing parties are going into the election campaign with a wafer-thin lead in the polls.
As socialists, we urge everyone to vote Left to get this government out. The Greens and Te Pāti Māori are clearly to the left of Labour on most policy issues. The Greens have also been much more effective in criticising the Government than Labour, with Chlöe Swarbrick repeatedly highlighting the Government’s intimate relationship with big business and its reactionary character.
Of much greater importance than voting behaviour on election day is what happens on campuses, workplaces, and the streets between now and then. Students have been hit with 18 percent fee rises in three years, the removal of the third-year fees-free, and consequently rising debt. They have had a gutful and there will be more large student protests in the coming months. We have seen large strikes from 2023 to 2026, and it is crucially important that workers continue to take strike action for a better deal on wages and conditions. LGBTQI+ activists are mobilising against the reactionary anti-trans rights Definitions of Woman and Man legislation. There are likely to be further protests focusing on other obnoxious policy changes being made by this Government. Strikes, protests, and grassroots campaigning will be crucial if this is to become the first single-term National Government in New Zealand’s political history.
