Budget 2026 - long on restraint, short on hope
Budget 2026 introduced to Parliament by Finance Minister, Nicola Willis, was long on restraint and short on hope. Cuts to the student "fees free" program breached a 2023 National Party election promise to fund tertiary students.
Other cuts to State House tenants made life even more difficult for some of the most vulnerable people in the country. The government's explanation was that it helps "even out" the support from the government which is currently given to State house tenants but not to low income tenants in private rental accommodation.
A better way to make things fairer would have been to increase income support for struggling families in private accommodation. A New Democrat - led government will boost support for low income families as we move to make the country more resilient and build social cohesion.
Bank Levy a small step in the right direction
The government's decision to impose a Levy on the largely foreign-owned banking sector was a small step in the right direction. The New Zealand Government is introducing a new prudential levy on banks, non-bank deposit takers, and insurers, which is expected to take effect in mid-2027. Announced as part of Budget 2026, the levy will shift the cost of Reserve Bank regulation and supervision from taxpayers directly onto financial market players.
The levy is expected to recover approximately $209 million over four years. This equates to roughly $70 million annually, which the government notes is less than 1% of the total profits of the "Big Four" banks. Willis said that she would have liked to have gone further, but ACT Party objections meant that the $70million was the best she could get from her Cabinet colleagues. Act leader and advocate for less regulation, David Seymour, argued against the levy on the basis that the banks would pass on the cost of the levy to customers. Finance Minister Nicola Willis has directed banks not to pass the costs of this levy onto everyday customers.
Meanwhile, even with the levy, the big banks will continue to keep at least 99% of the $7billion annual profit they extract from hardworking kiwis every year. Most of the profits are shipped offshore to overseas owners.
Credit Creation should be done at the local level
We need new regulations to limit big bank lending for property speculation and to promote community bank credit creation for productive purposes. Prof. Richard Werner spoke at a Monetary Institute conference advocating for local community banks rather than a centralized solution to the problem of bank credit creation.
The government should be encouraging the development of local, cooperatively-owned, banks to allocate credit within local communities, towns and cities. The solution to banks concentrating financial power in their own hands is to decentralize that power back to the local communities to primarily meet local needs for productive investment. Werner cited Germany and China as examples.
Create Your Own Website With Webador