Aotearoa's Borrowing Surge: National Outpaces Labour Amid Tax Relief Policies

𝘛𝘩𝘦 𝘕𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘨𝘰𝘷𝘵 𝘣𝘰𝘳𝘳𝘰𝘸𝘦𝘥 𝘮𝘰𝘳𝘦 𝘪𝘯 2 𝘺𝘦𝘢𝘳𝘴, 𝘵𝘩𝘢𝘯 𝘓𝘢𝘣𝘰𝘶𝘳'𝘴 6 𝘺𝘦𝘢𝘳𝘴, 𝘧𝘶𝘦𝘭𝘦𝘥 𝘣𝘺 𝘵𝘢𝘹 𝘤𝘶𝘵𝘴/𝘳𝘦𝘣𝘢𝘵𝘦𝘴 𝘧𝘰𝘳 𝘸𝘦𝘢𝘭𝘵𝘩𝘺, 𝘭𝘢𝘯𝘥𝘭𝘰𝘳𝘥𝘴, 𝘢𝘯𝘥 𝘵𝘰𝘣𝘢𝘤𝘤𝘰 𝘧𝘪𝘳𝘮𝘴—𝘸𝘪𝘥𝘦𝘯𝘪𝘯𝘨 𝘥𝘦𝘧𝘪𝘤𝘪𝘵𝘴.

Published By Bruce Alpine: 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀.

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ince winning the election in October 2023—amid fierce criticism of the previous Labour government's Covid-19 stimulus spending—the National-led coalition government, headed by Finance Minister Nicola Willis, has now borrowed more in just two years than Labour did over its entire six-year term.

New Zealand's National-led government has increased gross sovereign-issued debt by over $100 billion in under two years (October 2023–August 2025), exceeding the Labour government's $88 billion rise over six years (2017–2023).

Finance Minister NIcola Willis seems to be addicted to borrowing. file: Bruce Alpine

Treasury's Financial Statements for the year ended June 2025 show gross debt climbing from $250.9 billion (June 2023) to $272.1 billion (June 2025), a $21.2 billion jump in that period alone, but broader tracking by the Taxpayers' Union pegs it at $281 billion by August 2025—driven by annual issuances amid persistent deficits.

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Labour's increase was ~70% COVID-related; National's occurs in recovery, with operating deficits averaging $9–10 billion yearly.

This acceleration ties directly to revenue-eroding policies, costing $10–15 billion over five years per Budget 2025 estimates.

Critics, including Labour and the CTU, label it a "borrowing binge" favouring the wealthy, exacerbating inequality as net core Crown debt hits 41.8% of GDP (unchanged from 2024 but projected to 46% by 2027).

Tax Cuts for Higher Earners: July 2024 threshold adjustments (e.g., 33% bracket from $48k to $70k) and May 2025's "Investment Boost" (20% upfront deductions on new assets, up to $6.6 billion) deliver ~$8–10 billion in lost revenue. 

Benefits skew top-heavy: $1,500–$5,000 annually for $100k+ earners, reducing tax take by 2% of GDP and fueling $4–5 billion yearly deficits. 

Landlord Interest Deductibility Rebates: Fully restored (100%) from April 2025, reversing Labour's limits, this adds $2.9 billion over four years. 

Large landlords (200+ properties) pocket $464 million collectively via refunds; phased 80% in 2024 spurred $700 million annual shortfalls, with minimal rent relief amid soft demand.

Tobacco Tax Exemptions: Extended breaks for heated products (e.g., IQOS) through 2027, plus Smokefree Act repeals, forfeit $300+ million over three years (~$100 million/year). 

NZ's tobacco ranking plunged to 53rd globally, prioritising industry profits over health savings and inflating long-term fiscal burdens. 

Defenders tout growth stimulation (GDP forecast: 1.5–2% in 2026), but subdued productivity and $1 trillion national debt strain households. 

Treasury's November update warns of risks if growth lags.

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