The coalition government’s obsession with cost-cutting has already slashed $7.47 billion in public sector spending since the 2023 mini-Budget, with 6.5-7.5% savings demanded across all agencies. Now, Willis is doubling down, citing the “weaker economy” she has caused and Trump’s tariffs as an excuse for deeper cuts. But this is no external shock…it’s a self-inflicted wound. Health NZ, already stretched, faces a $1.4 billion savings target that analysts warn cannot be met without gutting frontline services. Budget 2024’s $16.68 billion health funding over three years sounds impressive, but it’s a drop in the bucket against inflation, wage pressures, and an ageing population. The result? Longer wait times, understaffed hospitals, and a mental health sector on its knees…evident in the Mental Health Foundation’s looming and brutal cuts to staff numbers.
Education is no better off. Despite Willis’ claims of prioritising “frontline services,” the coalition of chaos axed $2 billion in school building projects, contributing to an estimated 8,000 job losses in the construction sector alone. Educational achievement and attendance are already plummeting and Willis’ further cuts will only worsen these problems. Schools are crumbling, teachers are overworked, and kids from vulnerable communities, particularly Māori and Pasifika, face shrinking opportunities. The New Zealand Council of Christian Social Services warned that 400 Oranga Tamariki providers face funding uncertainty, threatening services for thousands of at-risk kids. But does all of that give Nicola Willis pause to think about her financial decisions?
Yesterday, RNZ reported:
The government has freed up "billions" of dollars through additional public service cuts to be redeployed into "New Zealand's most pressing priorities".
Finance Minister Nicola Willis announced at a speech to the Hutt Valley Chamber of Commerce on Tuesday morning the government is halving its operating allowance - the new money it has available to spend at the May Budget - from $2.4 billion to $1.3b.
That will result in only a small number of government departments receiving additional funding this year with Willis characterising next month's Budget as "no lolly scramble".
Vulnerable communities are being hit hardest. Budget 2024’s tax cuts, costing $3.7 billion, overwhelmingly benefit higher-income households, while cuts to housing, conservation, and Māori-specific programs exacerbate inequality. Pasifika and ethnic communities face disproportionate impacts from reduced Ministry funding, with NGOs sounding alarms about service gaps. Willis’ “social investment” rhetoric feels like a cruel joke when frontline providers are being starved of cash and cannot do their jobs properly.
The economic fallout is dire. New Zealand climbed out of a technical recession in Q4 2024 with modest 0.7% GDP growth, but Willis’ austerity threatens to reverse this. Unemployment is forecast to hit 5.2% by June 2025, up from 3.6% in mid-2023, and net core Crown debt is projected to peak at 43.5% of GDP in 2024/25, well above what National promised pre-election. Public sector layoffs aren’t just numbers; they’re skilled Kiwis packing their bags for Australia. This brain drain shrinks the tax take, with Treasury forecasting an $18.5 billion revenue shortfall over the forecast period. Less revenue means more borrowing, with debt servicing already gobbling up more than defence, law, and housing combined - $1 in every $16 of government spending. Willis’ promise of a surplus by 2027/28 is a fantasy; Treasury now predicts deficits until 2029, largely due to National’s economic mismanagement.
Mainstream media’s silence about all this is deafening. While outlets like NZ Herald and Stuff occasionally report on GDP figures or Willis’ lacklustre speeches, they gloss over the human cost…failing to connect the dots between cuts, job losses, and social decay. Prioritising landlords and roads over people isn’t governance; it’s economic vandalism. Willis’ refusal to adjust her $2.4 billion operating allowance upwards, despite Treasury’s warnings it won’t currently cover cost pressures, shows that the finance minister is terribly out of her depth.
Labour’s Chris Hipkins rightly argues for investment spending to stimulate growth, but Willis clings to a failed 1980s ideology of “smaller government.” New Zealand deserves better…a government that invests in health, education, and its people, not one that slashes and burns while skilled Kiwis flee and vulnerable communities crumble. Willis must reverse course, or her legacy will be a deeper recession and weaker economy unable to contend with the numerous external shocks analysts are predicting.