Budget 2026: Shifting Costs onto the Most Vulnerable
By Paul Barber
Budget 2026 presents itself as fiscally prudent and targeted, but that comes with the price of entrenching hardship, shifting costs onto those least able to bear them, and missing key opportunities to address structural inequities.
There is almost complete absence of targeted and meaningful investment in work to address the disproportionate impact of hardship on Māori and Pacific people and honour Te Tiriti commitments.
The most striking feature of Budget is the take (more) with one hand and give (less) with another approach to support for people most in hardship. Changes to social housing and income support exemplify this. Around 84,000 social housing tenants are set to face rent increases averaging $31 per week, with a further almost 6,000 people in transitional and emergency housing also affected. At the same time, reductions in Temporary Additional Support payments reduce additional income assistance by $195million in coming years. On top of this tighter tenancy settings will erode stability—despite stable housing being foundational to wellbeing. These measures do not reduce overall need; they merely reallocate already limited assistance, effectively forcing households to absorb the shortfall through cuts to essentials like food, heating, and transport.
Other housing support policy offers little prospect of meaningful improvement in housing affordability for those on lower incomes. Increases to the Accommodation Supplement maximum payment will benefit less than a third (110,000) of the 368,000 AS recipients) and the gains are small ($10 – $30 per week). Overall homelessness funding declines by $16 million, continuing the declining trend of the past three years. A one-off increase in homelessness funding in September 2025 does not appear to be continued beyond the current June 2026 year and Housing First funding is back to the same as in 2025. Transitional Housing places increase by more than two hundred, but with higher tenant contributions. The result is a system that tries to alleviate the worst of homelessness but holds no vision to end homelessness.
Child poverty projections further underline the lack of interest in meaningful action to reduce hardship. A temporary boost to Working for Families may briefly reduce hardship in 2027, but forecasts show no sustained improvement, with poverty rates expected to stagnate through to 2030. The government is projecting its own failure to meet goals to reduce child poverty and 50,000 fewer people on Jobseeker support by 2030 – both are projected to be at the same levels in 2030 as they are now. Even positive initiatives such as increased employment support for sole parents are framed as generating savings, highlighting a fiscal lens that fails to incorporate a rounded social investment approach to welfare support.
Commitment to ongoing funding for food security programmes gives much needed certainly for the food rescue and distribution networks, but community food banks support is limited to the June 2027 year, even as the government forecasts continuing high levels of hardship through to 2030.
In the face of record high youth unemployment, the doubling of trades academies in schools and Youth Guarantee places is a welcome investment. But this is at the cost of cancelling fees-free tertiary study for thousands of other young people.
Mental health and addiction services receive no additional investment—despite a recent poll saying that 61 percent of people think it is the biggest health issue facing our country and levels of mental health distress continuing to be very high among young people.
Minor tax changes such as a (very) small bank levy acknowledge tax fairness concerns. Yet these measures are missed opportunities to gather additional revenue to help address the high levels of need across our communities. A bank levy similar to Australia’s and an excess profits surcharge like in the United Kingdom could generate $550million – enough ongoing revenue to increase the Accommodation Supplement, keep IRRS at 25%, maintain existing TAS settings and keep school lunches.
The Government’s priorities lie elsewhere. Corrections spending continues to grow sharply up by $125 million alongside a projected rise in the prison population. Defence spending is up by $388 million as well as a further $2.3billion in capital spending planned.
Children’s hardship is less important than prisons and warships – a bitter message to swallow.
Salvation Army media releases:
Budget 2026 risks pushing more families into hardship – The Salvation Army NZFTS
Salvation Army warns food banks could close after government funding ends: | RNZ News
Government Budget website: Budget 2026 – 28 May 2026