Election 2026: Government’s books in better shape than expected, National says ‘our plan is working’
The Government’s books are in better shape than previously expected, with Treasury today revealing the deficit is more than a billion dollars smaller than forecast.
That is being put down to a slightly larger tax take than predicted, as well as smaller expenses. Net core Crown debt is a smidgeon higher than previously thought.
National leader Christopher Luxon is suggesting the results show “our plan is working”.
The latest financial statement issued by Treasury on Thursday compares results for the three months to September 30 against forecasts based on the Pre-election Economic and Fiscal Update (Prefu).
“Overall, most of the key fiscal indicators for the three months ended 30 September 2026 were slightly better than forecast, while the debt indicators were broadly in line with forecast,” Treasury said in a statement.
The traditional operating balance before gains and losses (Obegal) measure shows New Zealand’s deficit was $3 billion. That is $1.4b smaller than what had been forecast.
Using the Government’s preferred metric of Obegalx (which excludes the Accident Compensation Corporation), the deficit was $2.8b, which is $1.3b smaller than forecast.
This comes as core Crown tax revenue was put at $31.5b over the three months, which was $300 million higher than forecast. Among the reasons for this was a higher corporate tax take.
Core Crown expenses were $37.4b, which was $500m lower than forecast. This was spread across several agencies, including transport and communications, housing and community development and other services.
Another aspect helping the books, Treasury said, was a “stronger-than-forecast performance of several entities within the [State-Owned Enterprises]”.
A key metric often looked at is net core Crown debt. That was sitting at $193.2b or 42.3% of Gross Domestic Product (GDP), about $200m higher than expected.
Luxon took over the speaker system on National’s campaign bus on Thursday morning to announce the result to a travelling band of staff and members of the Young Nats.
“The deficit was $1.3b smaller than forecast just in the Prefu ... that’s more evidence that our plan is working,” Luxon said. “I’ve got to say, it’s completely predicated on sticking with the plan”.
National finance spokeswoman Nicola Willis said it showed “three years of responsible economic management is paying off”.
“It reinforces recent surveys showing economic optimism and hiring intentions are increasing, and backs up other evidence that proves our economy is gaining strength,” she said.
“Exports are booming, the manufacturing sector is on a tear, and economic growth is outpacing countries like Australia, the United States and the United Kingdom.
“New Zealand is navigating its way through global uncertainty better than most of its international counterparts and Kiwis can look forward to the benefits flowing through to households if we stay the course.”
Labour’s Chris Hipkins said it could just come down to timing.
“There’s fluctuation from month to month on that. One of the things there is, there’s higher tax revenue and lower government spending,” he said.
“We’ll want to interrogate that as to how much of that lower government spending is just timing because government spending does fluctuate based on timing.”
The party’s finance spokeswoman Barbara Edmonds said National shouldn’t be claiming it as a win when there were other issues, like high unemployment.
Jamie Ensor is the NZ Herald’s chief political reporter, based in the press gallery at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. He was a finalist in 2025 for Political Journalist of the Year at the Voyager Media Awards.