Labour's Fiscal Strategy

Labour will:

Balance the books and return to surplus

Returning the original measure of OBEGAL, removing OBEGALx, Labour will return a surplus by 2029/30 and maintain a sustainable fiscal position over the forecast period. Labour's plan to return to an OBEGAL surplus in 2029/30 uses the same timing forecast in Budget 2026. Labour will return to a positive operating balance while still investing in the people, services and infrastructure New Zealand needs.

Bringing down debt

Labour will aim to reduce net debt down to 20% of GDP over time, and prioritise investments which support a strong growing economy. Net debt gives a better picture of the government's overall fiscal position because it recognises that the government also owns financial assets. This measure includes a wide range of government assets, such as the Super Fund and advances, and liabilities, including debt held by other Crown agencies like Kainga Ora.

Keep government spending and revenue sustainable

New Zealand should be making investments today so it can have a more productive tomorrow and reduce the debt burden in the future. That includes capital projects the country needs, like hospitals that don't leak, ferries that operate safely, and classrooms that aren't cold. Under Labour, core Crown expenditure and revenue will be maintained at around 33% of GDP when the capital gains tax is fully implemented.

Ensure fiscal transparency

We will establish a Parliamentary Budget Office to provide independent analysis of the government's books and election commitments, so all New Zealanders can see the trade-offs governments are making in their budgets.

Time for a change

New Zealand cannot afford three more years of a National-led Government. They promised to fix things but after three years of fiscal mismanagement the country is worse off on almost every measure.

• Public services have been weakened by underinvestment and cuts to the frontline.
• Debt is higher, the return to surplus is further away than it was under Labour's forecasts, unemployment has climbed to near a decade-high, and too many families are finding it hard to make ends meet.
• Small businesses are under pressure, business confidence has been undermined, wages are failing to keep pace with rising costs, and more children are growing up without the basics.

Labour will balance the government's books without shrinking the economy.

A growing and resilient economy means governments can invest in quality healthcare, education, infrastructure, housing, and the public services that give people security and opportunity.

We will back New Zealand's potential by supporting businesses, especially the small businesses that are the heart of our economy, to grow and create good jobs, so people can build a future here, not overseas.

Labour has a proud record of managing the country's finances responsibly while investing in growth. We will continue that approach, investing in the things that make our economy stronger: more people in work, higher productivity, and public services that work for the people who pay for them.

Putting people at the centre of fiscal and economic decision making

Economic policy should be judged by what it means for people's lives. Kiwis are working hard, doing the right things and playing by the rules, yet too many are still falling behind.

National has talked about economic growth while life has become harder and more expensive for the people that growth is supposed to benefit. Measures like GDP, inflation and debt are important, but they are not ends in themselves.

They matter because of what they mean for people: whether they have a good job, can afford the basics, access the services they need, and feel confident about their future.

Restoring wellbeing reporting

Labour will restore wellbeing reporting to the Public Finance Act, to ensure decisions take into account the impact on the lives and livelihoods of New Zealanders. Fiscal responsibility goes hand in hand with social responsibility. A government cannot claim success at managing the books if the result is higher unemployment, worsening services or poorer outcomes for New Zealanders.

Labour will use wellbeing measures alongside traditional economic measures to test whether government policies are actually helping New Zealanders get ahead: whether people have well-paid work, can cover the bills, are healthier and more secure, and feel confident about the future.

Restoring the Reserve Bank's dual mandate

Labour will restore the Reserve Bank dual mandate, so monetary policy is developed in a way that is consistent with two objectives: achieving and maintaining stability in the general level of prices over the medium term, and supporting maximum sustainable employment.

Keeping inflation in the target band is critical. High inflation squeezes household budgets and makes it harder for people and businesses to plan and invest. But unemployment has an outsized influence on those who lose their jobs, and on the wider economy and society.

Losing a job can be devastating for a family and damaging for the wider economy. It means less household spending, impacts on businesses, lost skills and experience, and lasting damage to productivity. It can also lead to higher demand for services like foodbanks, and more people sleeping rough. Prolonged unemployment can create lasting wage scarring, making it harder for people to get back on their feet and for the economy to reach its full potential.

Other countries, including the United States and Australia, continue to implement a dual mandate, keeping inflation low and stable while ensuring as many people as possible are in jobs. By restoring the Reserve Bank dual mandate and wellbeing reporting, Labour will put people back at the centre of how public money is managed and how monetary policy supports a stable, growing economy.

Growing the economy and backing those who do the work

New Zealand's economy grows when the people doing the work have the confidence and opportunity to invest, hire and expand.

Labour will create the conditions for people and businesses to succeed: backing investment, helping businesses grow and create jobs, and ensuring the tax system supports investment and productivity.

Labour will:

• Invest in productivity and growth through infrastructure, technology, skills, research and development, and practical support for small businesses to grow and create jobs
• Make sure the tax system supports productive investment, including a capital gains tax that helps shift investment away from housing speculation and towards a productive economy that lifts wages and creates jobs
• Create a New Zealand Future Fund to protect our assets, make long-term investments in New Zealand, improve access to capital, and support high-growth businesses, innovation and infrastructure
• Invest in people by providing affordable public services like three free GP visits for all New Zealanders, education, training and transport that help Kiwis participate in the economy and get ahead

The debt burden should not be shouldered by future generations. That is the future cost of failing to invest in the infrastructure and productive capacity we need.

Under Labour, every dollar should work harder and smarter for New Zealanders, funding the services people rely on today while making the investments that grow the economy tomorrow. These investments will help lift productivity, strengthen economic resilience, and ensure more New Zealanders can build their future here.

Investing in our people, communities and long-term future

Strong public services are part of a strong economy. When families can afford to see a doctor, get a good education, get to work or study on reliable public transport, and get the support they need, it makes life easier. They are healthier, more productive, and can build a better future in New Zealand.

Public services are an investment. The right investment in health, education, housing and social services can prevent problems from becoming more serious and expensive later. Early intervention and the right workforce can reduce pressure on hospitals, police and the justice system, while helping more people stay healthy, in work and independent.

Labour will invest in modernising health, education and other essential services so they are easier to access, more affordable and more productive - making better use of technology, reducing unnecessary administration, and freeing up frontline workers to spend more time doing the jobs they are trained to do.

Where early investment can prevent greater costs later, government should have the confidence to invest upfront. Day-to-day spending must be sustainable, but Labour will also make responsible capital investments in the things New Zealand will rely on for decades, like hospitals, schools and infrastructure. Sometimes borrowing for those investments is the sensible choice that saves money later - failing to invest simply leaves a bigger bill for the future.

The test for every investment is value: does it improve people's lives, strengthen the economy, prevent greater costs in the future, or build assets that future generations will benefit from?