New Zealand PM outlines hard realities of a world ‘ordered by power’ in pre-Budget speech
The New Zealand government needs to prioritise national security and resilience and a commitment to multilateralism in a world that is “changing quickly and becoming less predictable”, the country’s prime minister has said in a pre-Budget speech.
Christopher Luxon said the current geopolitical situation meant that cooperation between nations had been superseded by more “transactional relationships without shared rules”, and added that this had created an environment in which “smaller countries have to adjust” to a world “ordered by power”.
“We need to adapt and secure our country’s future,” he said, emphasising that New Zealand was “disproportionately exposed” to new threats.
He highlighted that international relations are moving from “an economic focus to one dominated by security concerns” and that competition “now means cyber-attacks, disinformation, supply chain coercion, and grey-zone operations are primary tools of statecraft”.
He added: “We are moving away from a world that valued efficiency, like lean supply chains and borderless capital, to one that now puts national resilience first”.
Read more: New Zealand government announces plan to cut nearly 9,000 public service jobs
Protecting multilateralism in an ‘unsentimental world’
Luxon said the United States’ America First focus, Russia’s invasion of Ukraine, and China “assertively expanding its influence across the Indo-Pacific and beyond”, had contributed to an “unsentimental world”.
Countries in the Global South, Africa, Latin America, Southeast Asia and “our own Pacific neighbourhood” are “no longer willing to remain passive in a system they did not help design”, he said.
He described this new world as one “New Zealand must now navigate”, and continued: “As a small nation without the means to assert ourselves diplomatically or economically, New Zealand has benefited hugely from the system of rules that has been built up through the multilateral system.
“We helped build it and we have a long record of continuing to invest in its development. Our values, trade and security all depend on that foundation. And alongside our friends and partners, we must keep working to protect it and remake it.”
He noted that small countries have often done well during times of change when they are “coherent, trusted and stand for their values and interests” and that while there are “forces in global politics that none of us can fully control”, what can be controlled is “how prepared we are, how resilient we are and how well we stick together”.
Read more: Public service commissioner sets out ‘significant risks’ to New Zealand government
Investment in defence capability – and key Budget figures
Luxon said it was “critical” for New Zealand to invest in its defence capability, both to support national and economic security and to boost resilience across the region.
He said that if re-elected in the November general election, the National party was “committed to continuing to implement the Defence Capability Plan, double defence expenditure as a share of the economy, and prioritise interoperability of our defence forces with… Australia”.
He added that New Zealand would work to diversify both its trade and defence relationships.
Towards the end of his speech, the prime minister announced that the net operating package in the Budget would be NZ$2.1bn (US$1.2bn) “or around NZ$300m (US$174m) smaller than the NZ$2.4bn (US$1.3bn) allowance set in December, despite the recent [fuel] crisis”.
He said responding to the fuel crisis – which he described as a crisis of national resilience and economic security – “through more spending would risk leaving New Zealand even more exposed”.
The new Budget “is achievable because, while the government continues to invest in essential services like health and education, “for the third year running we have been able to achieve significant savings across government”, he explained.
“At the same time, while we continue to prioritise a return to surplus, the recent crisis has acted as a timely reminder that significant levels of capital investment will be required in the coming years.”
As such, he said this year’s capital package would be larger than originally planned, at a net NZ$5.7bn (US$3.3bn) and would be invested in building modern and resilient infrastructure, developing a defence force that is “fighting-fit, capable of keeping Kiwis safe and safeguarding our region from malign interference”, and on schools, hospitals and “responsive public services”.
He said this wouldn’t reflect “a permanently higher rate of borrowing” and that the government would need to get the balance right in the years ahead “as we rebuild our fiscal buffers”.
New Zealand’s Budget 2026 will be delivered by finance minister Nicola Willis on 28 May. In the run-up to the Budget, she announced major public sector reform plans and cuts, including the cutting of nearly 9,000 public service jobs and a reduction in most agencies’ operating budgets by 2% in the coming year and an additional 5% in each of the following two years.
The government is also merging several departments into one and has signalled its intention to further reorganise departments on a “case-by-case” basis. Read more about those plans here.
About Jack Aldane
Jack is a British journalist, cartoonist and podcaster. He graduated from Heythrop College London in 2009 with a BA in philosophy, before living and working in China for three years as a freelance reporter. After training in financial journalism at City University from 2013 to 2014, Jack worked at Bloomberg and Thomson Reuters before moving into editing magazines on global trade and development finance. Shortly after editing opinion writing for UnHerd, he joined the independent think tank ResPublica, where he led a media campaign to change the health and safety requirements around asbestos in UK public buildings. As host and producer of The Booking Club podcast – a conversation series featuring prominent authors and commentators at their favourite restaurants – Jack continues to engage today’s most distinguished thinkers on the biggest problems pertaining to ideology and power in the 21st century. He joined Global Government Forum as its Senior Staff Writer and Community Co-ordinator in 2021.
