Less cash will be thrown around in this month’s Budget, the Prime Minister has told a business audience in Auckland.

The precarious economic situation means the Government must stay on track with its fiscal strategy, Christopher Luxon told the BusinessNZ event.

“We can’t control the storm, but we can secure New Zealand’s future within it,” Luxon said.

He also said global turmoil had reinforced the importance of responsible economic management and fiscal discipline ahead of Budget 2026.

Operating spending on new initiatives in the Budget will be $2.1 billion – about $300 million less than the $2.4b allowance set in December.

“We are getting the books in order while continuing to invest in the essentials – health, education, defence, law and order and infrastructure. That requires ongoing reprioritisation, because the alternative is more borrowing or higher taxes – and ultimately a weaker economy,” Luxon said.

The Prime Minister confirmed the Government remained committed to returning the books to surplus by 2028/29 and putting debt on a downward trajectory towards 40% of GDP.

This year’s Budget will be unveiled on May 28.

In a wide-ranging speech on geopolitical tensions and New Zealand’s place in the world, Luxon spoke about how unsettled the world is and forces in global politics that none of us can control.

Prime Minister Christopher Luxon make a speech to BusinessNZ at the Pullman Hotel in Auckland, New Zealand on May 13, 2026. Photo / Jason Dorday

“But here’s what we can control: how prepared we are, how resilient we are and how well we stick together,” he said to the 250 attendees.

Immigration, energy security and strong bilateral relationships will be priorities for National, Luxon said.

“In a more volatile world, some of our traditional friends and partners seem to be doing the same – forging new partnerships shaped by many of the values we hold dear, and their own support for the rules-based international order.

“The multilateral values and institutions that have underpinned our prosperity may be under strain, but they haven’t perished. We must evolve and remake them.”

‘Careful’ immigration policy

Immigration is fast becoming a major election issue.

Luxon said National will have a “careful” immigration policy heading into the election and he was aware immigration issues can fracture communities and social cohesion.

“My message to the business community is that when it comes to immigration, when faced with a choice between social stability and your bottom line, I will choose the former every single time.”

And on energy independence: “New Zealand’s energy vulnerability is no longer a theoretical risk; it is a live crisis on full display in the Strait of Hormuz every single day.

“On too many occasions, private capital, eager to bolster domestic energy production, has been pushed to the sidelines by overzealous planners and politicians in recent years.

“Several high-profile projects are now getting underway, thanks to our reforms like fast-track, which I expect will continue to grow in popularity by leaps and bounds.

“The reality is that when faced with energy shock after energy shock, it’s very hard to justify backing the skink over the solar farm.”

In a hint of what’s to come in the Budget, Luxon said it’ll be about “securing New Zealand’s future”.

On the allowance being $300m smaller than the $2.4b allowance set in December, he said it was achievable.

“While we continue to invest in essential services, like health and education, for the third year running, we have been able to achieve significant savings across Government.

“At the same time, while we continue to prioritise a return to surplus, the recent crisis has acted as a timely reminder that significant levels of capital investment will be required in the coming years.”

Finance Minister Nicola Willis has repeatedly said she would retain a focus of “tight control” on spending and an operating allowance of $2.4b.

Any spending will be on health, education, defence, law and order, with other departments likely to be told to find further “savings”.

In a rare pre-budget leak, New Zealand First leader Winston Peters last week revealed the Government would scrap fees-free tertiary study for final year students.

The flagship policy from the Labour-led Government provided up to $12,000 in tuition fee payments for the first year of provider-based study, or the first two years of work-based learning.

The coalition Government then changed it to cover the final year of tertiary education study.

Katie Bradford is a Senior Correspondent at the Herald. She has been a broadcast journalist for over 20 years and was based in the press gallery for 10 years. She specialises in politics, business and Auckland issues.