We are calling on the government to change course

In the afternoon of the announcement of Budget 2026, the NZCTU brought together more than 80 people from 50 organisations to pen a response to the Budget and what we would like to see. This response was then handed to MPs on the steps of Parliament at 6pm – representatives from Labour, the Green Party, and Te Pāti Māori attended to receive the letter, and students from Victoria University joined the rally. Below is the text of the letter.

New Zealand families are going backwards. Wages are too low for too many people. Working conditions are eroding, with 73% of workers getting real terms pay cuts this year. Food and energy are unaffordable for many, and the public services all New Zealanders rely on have been hollowed out.

For the past two years, this government has made poor choices that concentrate hardship on those least able to bear their consequences. Budget 2026 sadly continues this pattern.

Serious and sustained government action is needed now to reduce poverty. We need to rebuild public services, reduce child poverty, develop our public infrastructure and economic resilience, and ensure the wealthy pay their fair share.

This Budget does nothing to achieve these things. Instead, it conjures the mirage of an operating surplus by reducing the incomes of those with the least and cutting the public services we all rely on. 

This Budget cuts the incomes of some of the poorest households and communities in the country and provides almost no tangible cost of living relief. This is no vision for a fair society that provides hope for people, whenua, and the next generation.

• The Government has narrowed eligibility for social housing support and taken money away from the very poorest households in Aotearoa. The Government has chosen to do this, knowing it will push more families into poverty and increase social distress.
• The forecast return to surplus is built on the assumption that fuel prices will fall quickly – which is not the view of the oil markets. The minimal relief measures announced so far fall well short of what’s needed. Tens of thousands of families in need have been left without any support.
• Real wages are set to fall this year for the average worker, and Jobseeker numbers are forecast to stay above 200,000 for the entire forecast period. By the end of 2027, real GDP per capita is forecast to be lower than in 2023 – meaning four years of no real growth.
• We need a people-centred approach. To address the cost of living we need to lift wages, create jobs, and provide liveable benefits. Budget 2026 does not deliver any of this. Instead, it drags us backwards.

This Budget fails to address the historic underinvestment in the system, providing barely enough money to keep the lights on. This means access to healthcare will continue to deteriorate for ordinary Kiwis and unmet need will increase, as will needless suffering. 

• Demand for health services is growing rapidly, driven by an ageing population and increasingly complex health needs. Yet the Government has once again neglected to lift health investment to the levels needed to meet growing demand.
• The Budget’s failure to tackle child poverty, and the cost of living, will drive increased demand for health, further straining an overstretched system.
• New Zealand faces a chronic shortage of skilled healthcare workers. This Budget contains no measures that address this gap. This shortfall will only get more serious in the coming years, so investment is needed now.
• To address the health crisis, we need a sustained uplift in public health investment alongside a workforce development strategy to ensure we train and retain the health workforce of the future.

Budget 2026 will not set New Zealand up for the future we all deserve. The Government has failed to use our collective resources sensibly to strengthen the infrastructure our communities need to thrive. We need to seize this moment to build energy security, and lower energy costs for households. It has failed to invest at scale in the infrastructure that matters most to communities like social housing, hospitals, and schools.

• New Zealand’s energy system is under serious strain. The decline of domestic gas fields and the rising price of petrol and diesel is causing energy poverty for many households and threatening some businesses.
• The path to an affordable and secure energy system is to invest in renewables and clean transport systems. We generate the same amount of electricity that we did a decade ago.
• We have growing homelessness in this country because of unaffordable housing. The government needs to increase its investment in public housing to address the growing homelessness and housing precarity in this country. Yet the new social housing builds announced today do not start until 2028/29.

For the third year in a row, this Government has undervalued te taiao, reduced our ability to mitigate climate change and putting whanau on the frontline of its impacts. This Budget fails to protect the people and communities likely impacted by climate change.  

• In recent years, billions of dollars of damage has been caused by climate-change related storms and many lives have been upended. The frequency and severity of these events is only going to increase as the planet warms.
• Budget 2026 has made almost no provision to address this. The only new funding it has provided for climate resilience is into roads. No funding has been made available to help communities adapt to the coming shocks. 
• Now is the time to begin making long-term investments in our climate resilience, starting with the most at-risk communities and regions. The longer the delay, the larger the cost in the future. 

This Budget makes further cuts to education and to the public services New Zealanders rely on. This government has abdicated its responsibility to deliver the services that hold communities together. This is a Budget lacking in empathy and humanity.

• The operational grants for schools have been cut 2% in real terms and the ECE subsidy has been cut 2.5% in real terms. Over $1 billion has been cut from tertiary education by the ending of fees free, of which only a fraction has been reprioritised to tertiary.
• Core public services are being slashed, with a cumulative real term cuts of at least 18% to public agency baselines over the next three years.
• New Zealand remains an international oddity for not having a capital gains tax, which would make our tax system fairer and generate meaningful revenue for vital public services. 
• We cannot deliver the public services New Zealanders require if we keep cutting the government’s revenue base. We need to lift government revenue by taxing capital gains and ensuring the wealthy pay their fair share.
• Government’s purpose is to protect and sustain the wellbeing of New Zealanders.

The current approach isn’t working. Unemployment continues to rise. The cost of essential goods and services remains far too high for many whānau. Our health, education, and other public services are under more strain than ever. Different solutions are needed.

Budgets are not easy. We acknowledge they involve difficult choices. But the choices made in this Budget are the wrong ones.

We are calling on the Government to change course: to invest in people, rebuild our public services, and lay the foundations for a fair, resilient, and thriving New Zealand. We cannot afford to continue making the wrong choices.