PREFU shows jobs pain and service cuts locked in under Luxon

PREFU shows jobs pain and service cuts locked in under Luxon

• September 29, 2026September 29, 2026

Treasury's Pre-election Economic and Fiscal Update (PREFU) forecasts show ongoing pain for working people and declining public services if the fiscal approach doesn't change. The election provides an opportunity for a reset.

"The Luxon Government's fiscal choices have made life harder for working people. There are now almost 50,000 more Kiwis unemployed than when it took office," says Sandra Grey, President of the New Zealand Council of Trade Unions Te Kauae Kaimahi.

"Treasury is now forecasting the unemployment rate will stay above 5 percent through most of 2027.

"Jobseeker numbers have also climbed under this Government, up 15 percent from when it came to power. The number of people on Jobseeker Support and the Emergency Benefit is forecast to stay above 200,000 through the entire forecast period - way above the Government's target," says Grey.

"Real wages have been squeezed in recent years and are forecast to fall further through the rest of 2026 and into 2027. Many Kiwi households are already unable to afford the basics. More real-terms wage cuts will be devastating."

Treasury is forecasting an upturn in growth, but this is heavily reliant on net migration and ongoing favourable terms of trade. Treasury's forecasts were completed before oil prices spiked again. Higher oil prices will mean higher inflation, higher interest rates, and reduced household spending, all of which drag on growth.

"The Luxon Government has continually promised an economic recovery, and it has continually failed to deliver it. The reality is the long-promised recovery looks as shaky as ever," says Grey.

Government expenditure is forecast to fall as a percentage of GDP. Core Crown expenses fall below 30 percent of GDP by 2031, and more than half of the annual Budget Operating Allowances are needed just for health cost-pressure funding. That money doesn't improve services or close funding gaps - it just keeps services running at current levels.

"Given the stress our public services are already under, and the large funding gaps, this reduction in Government spending is simply irresponsible," says Grey. "Health services are underfunded by more than $6 billion a year, according to Kaitiaki Hauora. The PREFU forecasts show this gap won't be closed under a second term of Luxon."

"The election provides an opportunity for a reset. The next Government needs to invest at scale in the things New Zealanders need: good jobs, stronger public services, and modern infrastructure. This is affordable if the Government makes the right choices, including tax reform," says Grey.