Prime Minister Christopher Luxon made his pre-budget address on Wednesday, with a speech ranging widely from defence to immigration and New Zealand's place in an increasingly unstable world.
The budget strategy reflects a recalibration by the government, focusing on restoring the public finances while boosting investment in critical assets, as policymakers respond to a sluggish economy and aging infrastructure at home and rising geopolitical and security risks abroad.
The net operating package in budget 2026 will be $NZ2.1 billion ($A1.73b), around $NZ300 million ($A246.9m) below the $NZ2.4 billion ($A1.197b) allowance earmarked in December, as the government seeks to return to an operating surplus excluding the state accident insurer by 2028/29.
The capital package will be larger than originally planned, at a net $NZ5.7 billion ($A4.69b), reflecting the need to invest in infrastructure, defence, schools and hospitals as New Zealand faces a more volatile global environment.
"Fiscal repair balanced with careful capital investment features heavily" in the budget, Luxon said, adding the government remained committed to putting debt on a downward path toward 40 per cent of gross domestic product.
The centre-right National-led government has made spending restraint and fiscal discipline core to its agenda since taking office, with Luxon highlighting a third straight year of savings across agencies alongside continued investment in health and education.
New Zealand's economy remains weak after a prolonged period of high interest rates, soft household demand and pressure on public finances.
Luxon said crises offshore had made the path back to surplus harder.
New Zealand could no longer rely on geography, alliances or renewable energy alone to shield it from global shocks, and reaffirmed plans to nearly double defence spending to two per cent of GDP, Luxon said.
"We can't have prosperity - more jobs, more exports, and higher wages - without security."
The prime minister framed the domestic policy push within a shifting global landscape, warning the world was moving away from a rules-based order toward one defined by power, security competition and national resilience.
"The United States, which supported the global order for 80 years, is now focusing more exclusively on its own view of its own interests. America First," he said.
"As a small, trading nation, we are disproportionately exposed," he said.
The budget will be delivered on May 28.
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