New Zealand Labour Says Budget Fails Those Struggling With Rising Living Costs

WELLINGTON, May 29 (Reuters) — New Zealand’s opposition Labour Party on Friday intensified its criticism of the government’s election-year budget, with shadow finance minister Barbara Edmonds saying it missed a crucial chance to address the country’s deepening cost-of-living crisis.

“A track to surplus is always a priority for any finance spokesperson and for any finance minister,” Edmonds told Reuters in an interview. “But it’s all about choices.” While she acknowledged the need to restore fiscal discipline, Edmonds said Labour would have made different trade-offs — including reversing the government’s changes to interest deductibility and the bright-line test for property — and redirected that revenue toward more direct cost-of-living relief.

The center-right coalition government, under Prime Minister Christopher Luxon, delivered a stripped-back budget on Thursday, forecasting a return to an operating surplus by 2029/30 — slightly ahead of earlier projections. The budget comes ahead of what is expected to be a tightly contested general election later this year, with voters increasingly worried about high inflation and mortgage costs.

Edmonds also argued the budget failed to tackle New Zealand’s long-standing productivity challenges, including limited access to capital, skills mismatches, weak innovation, and inadequate competition policy. She said the Treasury’s economic forecasts “may be too optimistic,” particularly its assumptions on tax revenue and falling petrol prices, warning that relying on such rosy scenarios could leave the government short of fiscal room if the economy underperforms.

The Labour Party’s critique reflects a broader political battle over how best to manage the economy as New Zealanders continue to feel the pinch from elevated living costs. With the election looming, the budget is likely to become a flashpoint, testing whether voters reward the government for fiscal restraint or punish it for perceived inaction on household financial pressures.

(Reporting by Lucy Craymer; Editing by Shri Navaratnam)