Photo: RNZ/LouisDunham
The prime minister is brushing off forecasts of doom and gloom for the New Zealand economy, insisting progress is being made – even if it is not yet showing up in the polls.
In recent weeks two ratings agencies have downgraded their outlooks to ‘negative’, a poll last week found more than half of voters were feeling pessimistic about the economy, with only 26 optimistic – fewer than actually expressed support for National.
Speaking to Morning Report on Tuesday, Prime Minister Christopher Luxon said the economy was the “number one thing” for the government.
“It’s been incredibly difficult dealing with high inflation, high interest rates and a slowing economy and a shrinking economy. That’s really been our challenge over the last 24 months, two years.
“And I know it’s still very difficult for New Zealanders, but yeah, we’ve been making progress on that. And we actually go into this current crisis, this fuel crisis, you know, and in better shape than we were even three months earlier. So we’ve got to get through this one. But I think we’re all over the crises, aren’t we? The pandemic, inflation.”
Morning Report co-host John Campbell put it to Luxon either the message was not getting through to voters, or the economy simply was not improving.
“I just would be careful about interpreting one poll. There was three polls in a week that sort of said some slightly different things,” Luxon replied.
Another poll that week found half of all voters believed New Zealand was heading in the wrong direction. Both had National losing support, and Labour and New Zealand First gaining.
Luxon said the ratings downgrades were due to massive borrowing during Covid.
“What that is saying is, ‘Look, New Zealand, you’ve tripled the debt through the Covid period.’ That’s been a huge load onto the New Zealand economy and our financials. And as they say, you’ve just got to have good, disciplined financial management.”
He claimed government spending had since fallen. Moody’s report noted debt as a percentage of GDP would rise to almost 54 percent by the end of June 2026, up from around 45 percent in 2025.
“Well, debt has been in nominal terms, but as a percentage, we’ve actually been managing to get debt down. It’s actually been, you know, core Crown spending has fallen,” Luxon said.
“Again, there’ll be lots of different forecasts around what people think it could be. The good news is that this is an economy that will still be projected to grow despite the fuel crisis.”
Debt has continued to grow under the coalition government, statistics show. In the year to June 2025, spending hit a new all-time high and outpaced revenue by more than $9 billion, once investment gains and losses were taken into account.
In 2023 when Luxon became prime minister, debt was 39.3 percent of GDP.
Luxon said there were “lots of different polls saying lots of different things”.
“I’m not saying that it’s been not a difficult time for Kiwis, because it definitely is. They’re all dealing with the cost of living.
“Now, there are some parts of the country that have been doing well. I’ve just come back from Christchurch. I had three days down there. Go spend some time there and see what’s happening. We want to see that across the whole of New Zealand, right?
“That’s why we’re doing things like the planning reform so we can get housing to be much more affordable. You’re seeing a really high proportion of, the highest proportion of young people buying new houses… We’ve had a 22 percent growth in Kiwis coming back home. We’ve had less Kiwis leaving every month than any month under Hipkins.”
The terrible 1News-Verian poll triggered Luxon to call for a confidence vote on himself – which he won, and does not regret.
“There’s been so much media speculation, frankly, and we’re talking about things that don’t matter to New Zealanders. And I wanted to shift the conversation back to the things that matter the most. And things like the Indian FTA are great, things like the trip to Singapore at the end of the week to try and build and deepen that relationship so we can build our economy is important.”
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