Media release: Better value from government is key to higher incomes and lower debt, report says
Wellington (Tuesday, 3 November 2026) - New Zealand heads into the election with two big problems barely mentioned on the campaign trail: rising government debt and stalling productivity.
A new report from The New Zealand Initiative, NZ Unbound: Freeing up growth and fixing the books, says the answer starts with getting value for money. That means value from what government spends and from the rules it makes.
If nothing changes, Treasury projects that interest costs will climb from 7.5 cents of every tax dollar this financial year to 32 cents by 2065. Credit rating agencies Moody’s and Fitch have already warned they may downgrade New Zealand.
Stalling productivity (how much we produce for each hour worked) also hits people’s pockets. New Zealanders earn about $20,000 a year less per person than Australians, even though we work just as hard.
It has not always been this way. After reforms began in 1984, productivity growth picked up quickly, but the gains faded once reform stalled.
The report says the least painful fix is faster growth with firmer control of spending. Government spends or redirects about half of everything New Zealand earns. Yet the Auditor-General has said it is ‘hard if not impossible’ to tell what $180 billion a year of central government spending achieves.
Regulation gets even less scrutiny. Spending goes before Parliament every year in the Budget, but existing rules and regulations never get a similar annual review, even though they cost households and businesses real money.
‘There is no silver bullet. Many things need to be done better, and they all come back to value for money,’ said author Dr Bryce Wilkinson.
The report puts forward six options.
- set up an independent fiscal watchdog on government spending, reporting to Parliament
- adopt firmer rules for deciding prudent levels of public debt
- report ‘temporary’ spending more clearly, so long-term costs are not hidden
- pay fair compensation when regulation cuts property values
- hold independent reviews of major spending and restrictive regulations
- give ministers more power to direct agencies and get information
‘If government got real value for money from what it spends and regulates, New Zealanders would be better off and the books would be easier to fix,’ said Dr Wilkinson. ‘We have done it before, and we can do it again.’
Dr Wilkinson and the Initiative’s Executive Director Dr Oliver Hartwich will discuss the report in a webinar at 2 pm on Tuesday 3 November. Register here.
NZ Unbound: Freeing up growth and fixing the books is available at www.nzinitiative.org.nz.
ENDS
Dr Bryce Wilkinson is available for comment. To schedule an interview, please contact:
Jamuel Enriquez, Marketing and Communications Manager
E: jamuel.enriquez@nzinitiative.org.nz
P: 021 022 34451
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About The New Zealand Initiative
The New Zealand Initiative is an evidence-based think tank and research institute contributing to public policy discussion.
Supported by the nation’s leading visionaries, business leaders and political thinkers, we are committed to making New Zealand a better country for all its citizens with a world-class education system, affordable housing, a healthy environment, sound public finances and a stable currency.
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