New Zealand’s 2024/25 Financial Results Show Fiscal Discipline Paying Off

New Zealand's latest financial statements reveal tangible progress in restoring fiscal discipline and stabilising the country's public finances, Finance Minister Nicola Willis announced today. The 2024/25 accounts, which are the first to fully reflect decisions made under the current Government, demonstrate that efforts to rein in spending and manage debt responsibly are beginning to take hold.

"These are actual numbers, not forecasts," Willis emphasised, noting that the figures show clear signs of improvement after several years of rising expenditure and debt.

Signs of Fiscal Stabilisation

According to the 2024/25 financial statements:

• Core Crown expenses declined from 33.1% of GDP in 2023/24 to 32.5% in 2024/25, signalling the Government's focus on tightening operational spending.

• Net core Crown debt remained steady at 41.8% of GDP, halting a five-year trend of continuous increases.

• The operating balance before gains and losses (OBEGALx) showed a deficit of 2.1% of GDP, which was $900 million better than forecast in the 2024 Budget.

"These results show we're making headway in returning the books to balance," Willis said. "We've demonstrated that it's possible to manage the nation's finances prudently while continuing to invest in critical public services and supporting New Zealand families."

$44 Billion in Cumulative Savings

Willis credited the improvement to the Government's strong commitment to fiscal discipline, pointing to $44 billion in cumulative savings achieved across its first two Budgets. These savings, she explained, have allowed the Government to fund key priorities—such as healthcare, education, police, and defence—while simultaneously providing tax relief and launching initiatives like the Investment Boost programme, designed to encourage business productivity and private-sector growth.

"The progress we're seeing reflects careful choices and responsible management," Willis said. "We're ensuring that every dollar spent delivers measurable results for New Zealanders."

Spending Growth Slows Sharply

While total Crown spending still rose in dollar terms, the increase was dramatically smaller than in previous years. Government expenditure grew by $2.7 billion in 2024/25, compared with a $11.4 billion increase the year before.

This moderation reflects a deliberate approach to gradual fiscal consolidation. Willis said the Government had resisted calls for abrupt cuts, citing international research showing that sustained, multi-year strategies are more effective and less disruptive to public services.

"We've been clear that deficit reduction must be steady and balanced," she said. "We will not compromise essential services or economic growth to meet short-term political targets."

The 2024/25 rise in expenditure was primarily driven by a $2.9 billion increase in superannuation and welfare payments, partially offset by savings in other areas.

Looking Ahead: Long-Term Fiscal Goals

The Government's fiscal strategy remains focused on further reducing spending as a share of GDP, with Treasury forecasts projecting a fall to 30.9% by 2028/29. Willis said this trajectory would put New Zealand on a more sustainable footing while maintaining funding for frontline services.

"The goal is not austerity—it's sustainability," she noted. "We're ensuring future generations inherit stable, healthy public finances."

Preparing for Budget 2025

Looking ahead, the Minister confirmed that the Budget Policy Statement (BPS) for the next fiscal year will be released on 16 December, alongside the Treasury's Half Year Economic and Fiscal Update (HYEFU). These documents will set the tone for the 2025 Budget, outlining new policy priorities and updated fiscal forecasts.

Economists have cautiously welcomed the latest figures, saying they suggest a turning point in New Zealand's fiscal management following years of high deficits driven by the pandemic, global inflation, and rising social spending. Analysts note that maintaining steady debt levels while reducing spending as a share of GDP represents a notable shift toward financial stability.

A Focus on Responsible Growth

Willis reiterated that the Government's approach is grounded in responsibility and realism—balancing the need for growth with fiscal restraint. "We're showing that fiscal repair and economic confidence can go hand in hand," she said. "By getting our books in order, we're laying the foundation for a stronger, more resilient economy."

With the 2024/25 accounts now in, the Government appears on track to meet its medium-term fiscal targets, strengthening New Zealand's reputation for sound economic management while ensuring that essential services continue to meet public needs.