With signs Middle East conflict will drag on, Government must rule out more borrowing

The Taxpayers’ Union is warning that Treasury’s repeated cautions about New Zealand’s vulnerability to an economic shock are now looking prophetic, as geo-security assessments suggest the Iran conflict is likely to drag on for months, not days or weeks.

“Over the last six months Treasury has made it clear: New Zealand is poorly positioned to weather another global shock. Unfortunately, those warnings now look less theoretical and more like a sign of what’s coming,” said Taxpayers’ Union spokesperson Tory Relf.

"While there is not yet evidence of a decisive global economic downturn, the probability of sustained disruption has increased."

“When economic shocks hit, governments have a habit of slapping another 10 percent of GDP onto the national credit card. But with core Crown debt already equating to roughly $140,000 per household, and international bond markets increasingly jittery about New Zealand’s fiscal discipline, the Debt Monster is no longer hiding under the bed - it’s at the front door.”

“Nicola Willis faces difficult choices, but the worst option of all would be to double down on a ‘borrow and hope’ strategy, kicking the can down the road while leaving our kids to foot the bill through higher taxes, weaker growth, and lower living standards.”

“Budget 2026 may be Willis's last opportunity to get spending under control, before her hand is forced. Continuing along Grant Robertson’s high-debt, high-spending track has left New Zealand exposed. Without a serious course correction now - structural spending restraint, not tinkering - the eventual fix will be far more painful.”