NZ Government Finances Explained - Where Your $170 Billion in Taxes Goes
Our guide explains where New Zealand's tax dollars come from, where they go, and what the government owns and owes as we examine the government's 2025 Financial Statement prepared by Treasury.
Updated 5 January 2026
Summary
To explain what you need to know, our guide covers:
- The Treasury publishes a 12-month set of Financial Statements for the Government of New Zealand annually, typically in October following the 30 June year-end.
- This guide uses the 2024/25 year data - the most recent available. MoneyHub updates this guide when new data is released, usually around December. While there are some comparisons to previous reporting years, the focus is on building an understanding of government income and spending in the most recent 12 months.
- While this guide is comprehensive, each section is designed to stand on its own - you can read it start-to-finish or jump directly to the parts most relevant to you.
- Important: This guide covers the Total Crown (central government, including Crown entities and investments) and Core Crown (central government departments only). We explain the difference where it matters.
To explain what you need to know, our guide covers:
- Where the Government's Money Comes From - $170 Billion in Revenue
- Where the Government's Money Goes - $183 Billion in Expenses
- The Deficit Explained - Why We're Spending More Than We Earn
- What the Government Owns - $598 Billion in Assets
- What the Government Owes - $409 Billion in Liabilities
- Understanding the NZ Super Fund - $82.8 Billion Rainy Day Fund
- Understanding the Government's Investments - Air NZ, Mercury, Meridian & More
- Historical Trends - How We Got Here
- Frequently Asked Questions
Key Findings - the Headline Numbers
Where the Money Comes From
Where the Money Goes
The Bigger Picture - What You Need to Know
The financial statements confirm several facts:
- Total revenue: $169.8 billion - what the government collected in taxes, levies, and other income (PAYE, GST, company tax, duties and more)
- Total expenses: $183.5 billion - what it spent on services, benefits, and running the country (everything from healthcare to schools to roading, and much more)
- The gap (known as the 'OBEGALx deficit'): $9.3 billion - we spent $9.3 billion more than we earned
- Net core Crown debt: $182.2 billion - 41.8% of GDP, unchanged from last year
- Total net worth: $189.1 billion - what the crown/New Zealand government 'owns' after all debts (43.4% of GDP)
Where the Money Comes From
- Individual income tax (PAYE): $61.8 billion - the single largest source
- GST: $29.5 billion - the second-largest tax
- Corporate tax: $17.5 billion - company profits
Where the Money Goes
- Social security & welfare: $47.5 billion - includes NZ Super ($17.6b), benefits (like Jobseeker Support), Working for Families
- Health: $30.3 billion - Hospitals, GPs, Pharmac, Health NZ
- Education: $20.9 billion - Schools, universities, early childhood
- Interest on debt: $8.9 billion - The cost of borrowing
The Bigger Picture - What You Need to Know
The financial statements confirm several facts:
- The government is spending more than it earns: Revenue totalled $169.8 billion, while expenses totalled $183.5 billion. That's a $13.7 billion gap before investment gains - the operating deficit before gains and losses (known as OBEGALx) was $9.3 billion. While this is improving from COVID-era deficits, it's not yet balanced.
- Most spending goes to welfare, health, and education: These three categories account for 70% of core Crown spending. NZ Superannuation largely drives social security alone ($47.5 billion), and as the population ages, this will grow.
- Debt has tripled in a decade: Net core Crown debt rose from $58 billion in 2019 to $182 billion in 2025. COVID required massive borrowing. At 41.8% of GDP, it's seen as manageable by international standards but significantly higher than pre-COVID levels (18.6% in 2019).
- Interest costs are high: The government pays $8.9 billion per year in interest, more than it spends on law and order ($6.7b), defence ($3.3b), or housing ($2.2b). In summary, higher debt means higher interest costs, crowding out other spending.
- The NZ Super Fund is the rainy day fund: Worth $82.8 billion, the NZ Super Fund earned $7.1 billion in investment returns in 2025. It exists to help pay future NZ Superannuation costs as the population ages - the government contributed $879 million this year.
- The government owns a lot: Total assets are $598 billion - roads ($73b), schools, hospitals, the electricity businesses (Mercury, Meridian, Genesis), an Air New Zealand stake, and the Super Fund. Total liabilities are $409 billion, which gives a net worth of $189 billion.
- Signs of improvement are emerging: The cash deficit dropped from $19.3 billion (2024) to $6.0 billion (2025). Expenses as a share of GDP fell from 42.9% to 42.1%. Debt as a share of GDP was unchanged at 41.8%. These are early signs of fiscal stabilisation, not a complete recovery.
Key Statistics at a Glance
Key data is presented below, and discussed in detail in the relevant sections:
Key data is presented below, and discussed in detail in the relevant sections:
| Statistic | Value | What It Tells You |
|---|---|---|
| Total revenue | $169.8 billion | All money collected |
| Total expenses | $183.5 billion | All money spent |
| OBEGALx deficit | -$9.3 billion | Operating shortfall |
| Net core Crown debt | $182.2 billion | Government borrowings |
| Debt as % of GDP | 41.8% | Unchanged from 2024 |
| Total assets | $598 billion | What NZ owns |
| Total liabilities | $409 billion | What NZ owes |
| Total net worth | $189.1 billion | Assets minus liabilities |
| Net worth as % of GDP | 43.4% | Down from 45.5% in 2024 |
| NZ Super Fund | $82.8 billion | Rainy day fund |
| Cash deficit | -$6.0 billion | Down from $19.3b in 2024 |
| GDP (year to June 2025) | $436 billion | Size of NZ economy |
Where the Government's Money Comes From - $170 Billion in Revenue
The government collected $169.8 billion in the year to 30 June 2025 - up $2.5 billion (+1.5%) from 2024. Tax revenue accounts for 71% of total revenue. The rest comes from ACC levies, ETS charges, dividends from investments and businesses, and sales of goods and services.
Revenue Breakdown
| Revenue Source | Amount | Share | vs 2024 |
|---|---|---|---|
| Tax revenue | $121.1b | 71.3% | +$1.2b |
| Sales of goods and services | $26.1b | 15.4% | +$1.0b |
| Other sovereign revenue | $9.8b | 5.8% | +$0.3b |
| Interest revenue | $7.0b | 4.1% | -$0.1b |
| Other revenue | $5.9b | 3.4% | +$0.1b |
| Total Revenue | $169.8b | 100% | +$2.5b |
Tax Revenue Detail - $121.1 Billion
Individual income tax (PAYE and other) is the single largest source of government revenue. When you look at your payslip, this is where that deduction goes:
| Tax Type | Amount | Share of Tax | Notes |
|---|---|---|---|
| Individual income tax (PAYE etc) | $61.8b | 51.0% | Largest source |
| GST (goods and services tax) | $29.5b | 24.4% | 15% on most purchases |
| Corporate tax | $17.5b | 14.5% | 28% rate |
| Other direct taxes (RWT, NRWT) | $4.5b | 3.7% | Interest/dividend tax |
| Fuel excise | $2.0b | 1.6% | Petrol/diesel |
| Road user charges | $2.0b | 1.7% | Diesel vehicles |
| Tobacco excise | $1.5b | 1.2% | Declining source |
| Alcohol excise | $1.2b | 1.0% | Beer, wine, spirits |
| Other (gaming, customs, etc) | $1.1b | 0.9% | Various |
| Total Tax Revenue | $121.1b | 100% |
Know This - Per Person Perspective: On a per-person basis (~5.2 million people), the government collects about $32,650 per year. Of this, about $23,300 comes from taxes (PAYE, GST, company tax, excise). This is a rough average - higher earners pay more, lower earners and children pay less.
Other Sovereign Revenue - $9.8 Billion
Beyond taxes, the government collects various levies and charges:
| Source | Amount | What It Funds |
|---|---|---|
| ACC levies | $4.2b | Accident insurance |
| Emissions Trading Scheme (ETS) | $1.8b | Climate policy |
| Natural Hazards Commission levies | $0.9b | Earthquake cover |
| Fire and Emergency levies | $0.8b | Fire services |
| Other (fines, penalties, misc) | $2.1b | Various |
Where the Government's Money Goes - $183 Billion in Expenses
Total Crown expenses were $183.5 billion - up $3.4 billion (+1.9%) from 2024. This growth rate is the lowest since 2021, reflecting tighter fiscal management after COVID-era spending surges.
Know This - Understanding Core Crown vs Total Crown
Know This - Understanding Core Crown vs Total Crown
- Core Crown ($141.7b) covers central government departments - the money Parliament directly controls.
- Total Crown ($183.5b) adds Crown entities like Health NZ, universities, and businesses in which it has investments in
- We use Core Crown for functional breakdowns because it's more directly controlled by government policy.
| Function | Amount | Share | vs 2024 | Per Household |
|---|---|---|---|---|
| Social security & welfare | $47.5b | 33.5% | +$2.9b | $23,900 |
| Health | $30.3b | 21.4% | +$0.3b | $15,300 |
| Education | $20.9b | 14.8% | +$0.7b | $10,500 |
| Finance costs (interest) | $8.9b | 6.3% | -$0.1b | $4,500 |
| Core government services | $7.9b | 5.6% | -$0.6b | $4,000 |
| Law and order | $6.7b | 4.7% | +$0.2b | $3,400 |
| Transport & communications | $5.5b | 3.9% | flat | $2,800 |
| Economic & industrial services | $3.5b | 2.5% | -$0.5b | $1,800 |
| Defence | $3.3b | 2.3% | +$0.1b | $1,650 |
| Environmental protection | $2.4b | 1.7% | +$0.1b | $1,200 |
| Housing & community | $2.2b | 1.5% | -$0.4b | $1,100 |
| Heritage, culture & recreation | $1.5b | 1.0% | flat | $750 |
| Primary services | $1.0b | 0.7% | -$0.1b | $500 |
| Other | $0.1b | 0.1% | ||
| Total Core Crown Expenses | $141.7b | 100% | +$2.7b | $71,400 |
Understanding What's Inside 'Social Security & Welfare' - $47.5 Billion
This is the largest spending category by far. It includes:
Important: The +$2.9 billion increase reflects:
Our View: Three categories - social security, health, and education - account for 70% of core Crown spending. As the population ages, NZ Superannuation costs will continue to grow, which is why the NZ Super Fund exists.
- NZ Superannuation: ~$17.6 billion - payments to over 900,000 superannuitants aged 65+
- Jobseeker Support: unemployment and sickness benefits
- Working for Families: tax credits for families with children
- Sole Parent Support, Supported Living Payment, accommodation supplements, and other targeted assistance
Important: The +$2.9 billion increase reflects:
- Benefit indexation to wages/inflation on 1 April (which means a higher spend)
- More NZ Super recipients as the population ages, and
- Higher Jobseeker numbers reflecting labour market conditions.
Our View: Three categories - social security, health, and education - account for 70% of core Crown spending. As the population ages, NZ Superannuation costs will continue to grow, which is why the NZ Super Fund exists.
The Deficit Explained - Why We're Spending More Than We Earn
Revenue: $169.8 billion. Expenses: $183.5 billion. The gap is $13.7 billion. After accounting for investment gains and losses, the key deficit measures are:
| Measure | 2025 | 2024 | What It Means |
|---|---|---|---|
| OBEGALx (main deficit measure) | -$9.3b | -$8.8b | Slightly worse YoY |
| Operating balance | -$4.4b | -$8.4b | Improved (gains helped) |
| Core Crown residual cash | -$6.0b | -$19.3b | Much improved |
| OBEGALx as % of GDP | -2.1% | -2.1% | Unchanged |
Understanding OBEGALx?
OBEGAL stands for Operating Balance Before Gains and Losses. The 'x' means 'excluding ACC' - because ACC's volatile claims liability can swing billions either way based on actuarial assumptions and models, which distorts the underlying fiscal picture. OBEGALx is the Treasury's preferred measure of the government's operating position.
How Did We Get Here? Let's recap:
Our View: The 2025 results show early signs of fiscal improvement. The cash deficit dropped dramatically ($19.3b to $6.0b), expense growth slowed, and debt as a share of GDP stabilised. But we're not back to surplus - the structural gap between spending and revenue remains.
How Did We Get Here? Let's recap:
- Before COVID (2019): Revenue was 38.4% of GDP, expenses were 35.9% of GDP, and the government ran surpluses. Net debt was just 18.6% of GDP.
- During COVID (2020-2022): Expenses surged to 43.7% of GDP in 2020 as the government funded wage subsidies, business support, and health responses. Revenue fell while debt tripled.
- Now (2025): Expenses have come down to 42.1% of GDP but remain well above pre-COVID levels. Revenue at 38.9% of GDP has recovered, and the gap persists - hence the deficit.
Our View: The 2025 results show early signs of fiscal improvement. The cash deficit dropped dramatically ($19.3b to $6.0b), expense growth slowed, and debt as a share of GDP stabilised. But we're not back to surplus - the structural gap between spending and revenue remains.
What the Government Owns - $598 Billion in Assets
Total Crown assets reached $598 billion at 30 June 2025 - up $27 billion (+4.7%) from 2024. The government owns an enormous amount of roads, schools, hospitals, power stations, land, and financial investments such as Air New Zealand and stakes in other businesses.
| Asset Type | Value | Share | Change |
|---|---|---|---|
| Property, plant & equipment | $292.6b | 49.0% | +$8.8b |
| Financial assets | $273.5b | 45.7% | +$16.4b |
| Other assets | $31.8b | 5.3% | +$1.9b |
| Total Assets | $598.0b | 100% | +$27.1b |
What's in 'Property, Plant & Equipment' - $293 Billion
This is the physical infrastructure of New Zealand:
- State highways: ~$73 billion - New Zealand's road network (managed by NZTA)
- Electricity generation assets: ~$30 billion - power stations owned by Mercury, Meridian, Genesis
- Land and buildings: schools, hospitals, prisons, government offices
- Rail network: KiwiRail's tracks, stations, and rolling stock
- Defence assets: ships, aircraft, equipment
What's in 'Financial Assets' - $274 Billion
These are investments and non-physical balances, such as:
- NZ Super Fund: $82.8 billion - investments for future superannuation costs
- ACC investments: ~$50 billion - assets backing future accident claims
- Advances and receivables: student loans, tax receivables, other amounts owed
- Cash and deposits: operating cash balances
- Shares in businesses: Air NZ (51%), Mercury (51%), Meridian (51%), Genesis (51%)
What the Government Owes - $409 Billion in Liabilities
Total Crown liabilities reached $409 billion - up $29 billion (+7.6%) from 2024. The largest components are government borrowings and the ACC claims liability.
| Liability Type | Value | Share | Change |
|---|---|---|---|
| Borrowings (bonds, bills) | $272.1b | 66.5% | +$21.1b |
| Insurance liabilities (mostly ACC) | $70.3b | 17.2% | +$3.8b |
| Other liabilities | $66.4b | 16.3% | +$4.1b |
| Total Liabilities | $408.8b | 100% | +$29.0b |
Understanding the Debt Story - Net Core Crown Debt
Net core Crown debt is the headline debt figure - gross borrowings minus financial assets held to offset them:
| Debt Measure | Amount | % of GDP |
|---|---|---|
| Gross borrowings | $239.0b | 54.8% |
| Less: financial assets | -$56.8b | |
| Net core Crown debt | $182.2b | 41.8% |
| Change from 2024 | +$6.7b | unchanged |
Know This - Why Did Debt Triple?: As outlined above, net core Crown debt rose from $58 billion (2019) to $182 billion (2025). COVID required the government to borrow heavily to fund wage subsidies, business support, and health responses. The debt exists - now it must be serviced and eventually repaid.
Understanding the ACC Claims Liability - $68.8 Billion
This represents the estimated cost of all future accident claims for injuries that have already occurred. It's an actuarial estimate based on expected treatment costs, rehabilitation, and weekly compensation for people injured up to 30 June 2025. The liability grew by $3.7 billion this year, reflecting new claims, updated cost assumptions, and changes in the discount rate.
Understanding the NZ Super Fund - $82.8 Billion Rainy Day Fund
The NZ Superannuation Fund is New Zealand's sovereign wealth fund, established in 2001 to help pay for future NZ Super costs as the population ages. It's managed independently by the Guardians of New Zealand Superannuation.
Our View: The NZ Super Fund earned $7.3 billion in investment returns in 2025 - an excellent result. Over time, this fund will grow to help offset the cost of NZ Superannuation. No withdrawals are expected before 2035. At $82.8 billion, it's one of the largest per-capita sovereign wealth funds in the world.
Our View: The NZ Super Fund earned $7.3 billion in investment returns in 2025 - an excellent result. Over time, this fund will grow to help offset the cost of NZ Superannuation. No withdrawals are expected before 2035. At $82.8 billion, it's one of the largest per-capita sovereign wealth funds in the world.
| Metric | 2025 | 2024 |
|---|---|---|
| Net worth (closing) | $82.8b | $74.8b |
| Investment gains | +$7.3b | +$8.4b |
| Government contribution | $0.9b | $1.6b |
| Operating balance | +$7.1b | +$8.5b |
Understanding the Government's Investments - Air NZ, Mercury, Meridian & More
The government owns stakes in several major companies. The 'mixed ownership model' companies (51% Crown, 49% listed) include the big electricity generators. Results for 2025:
| Company | Revenue | Result | Dividend | Crown Share |
|---|---|---|---|---|
| Air New Zealand | $6.8b | -$158m | $93m | 51% |
| Meridian Energy | $4.8b | -$454m | $544m | 51% |
| Mercury NZ | $3.5b | -$13m | $330m | 51% |
| Genesis Energy | $3.5b | +$174m | $153m | 51% |
| KiwiRail | $1.8b | -$104m | nil | 100% |
| NZ Post | $1.2b | break even | $20m | 100% |
| Transpower | $1.0b | +$97m | $114m | 100% |
| Landcorp (Pāmu) | $0.4b | +$125m | nil | 100% |
Why the losses? The electricity companies show accounting losses primarily due to the revaluation of derivatives and generation assets; the underlying cash generation remains strong (hence the dividends). Air NZ had a challenging year with fleet issues and competition.
Historical Trends - How We Got Here
The fiscal position has changed dramatically over the past decade. Here's the 10-year picture:
| Year | Revenue | Expenses | Net Debt | Debt/GDP | Net Worth |
|---|---|---|---|---|---|
| 2016 | $97b | $95b | $62b | 23.9% | $96b |
| 2017 | $103b | $99b | $59b | 21.6% | $116b |
| 2018 | $110b | $104b | $57b | 19.5% | $136b |
| 2019 | $119b | $111b | $58b | 18.6% | $143b |
| 2020 (COVID) | $116b | $139b | $83b | 26.2% | $116b |
| 2021 | $129b | $134b | $102b | 29.7% | $157b |
| 2022 | $142b | $151b | $129b | 35.2% | $174b |
| 2023 | $153b | $162b | $155b | 38.7% | $191b |
| 2024 | $167b | $180b | $175b | 41.8% | $191b |
| 2025 | $170b | $184b | $182b | 41.8% | $189b |
Know This - The COVID Impact: In 2020, expenses jumped from $111 billion to $139 billion (+25% in one year) as the government funded wage subsidies, business support, and health responses. Revenue fell. Net debt doubled from $58b to $102b in two years. We're still paying for that response.
Our View: The 10-year trend shows a fundamentally different fiscal position. Pre-COVID, net debt was falling toward zero, and the government ran surpluses. Post-COVID, we have $182 billion in net debt and are running deficits. The fiscal challenge for the next decade is to stabilise and eventually reduce this debt while maintaining services.
Our View: The 10-year trend shows a fundamentally different fiscal position. Pre-COVID, net debt was falling toward zero, and the government ran surpluses. Post-COVID, we have $182 billion in net debt and are running deficits. The fiscal challenge for the next decade is to stabilise and eventually reduce this debt while maintaining services.
Frequently Asked Questions
Is New Zealand in financial trouble?
No, but fiscal management matters. Net debt at 41.8% of GDP is moderate by international standards (Japan: ~230%, US: ~120% and Australia: ~32%). New Zealand's credit rating remains strong (AA+/Aaa) per Treasury's summary. However, the deficit means debt is still growing - the government must balance spending and revenue over time to prevent debt from becoming unsustainable.
What's the difference between gross debt and net debt?
Gross debt ($204 billion) is the total amount the government has borrowed. Net debt ($182 billion) subtracts financial assets held to offset borrowings. Net debt is the more meaningful measure because the government has assets that could be used to repay debt if needed
Why does the government run deficits?
Expenses ($183.5b) exceed revenue ($169.8b) - the gap exists because spending, particularly on health, education, and welfare, has grown faster than tax revenue. COVID required massive additional spending. Returning to surplus requires either increasing revenue (higher taxes), reducing spending (cutting services), or a mix of both. Neither is politically popular.
What does the $189 billion net worth actually mean?
Net worth ($189 billion) = Assets ($598b) minus Liabilities ($409b). It represents what New Zealand would have left if all assets were sold and all debts paid. But this is theoretical - you (arguably) can't sell state highways or hospitals. Net worth is a useful measure of overall fiscal position, but it doesn't represent spendable cash.
What happens if interest rates rise?
Higher interest rates mean higher debt servicing costs. Currently, the government pays $8.9 billion in interest per year. If rates rise 1%, that cost increases by roughly $2 billion per year on $182 billion of debt. This crowds out other spending - money spent on interest can't be spent on health, education, or infrastructure.
Why is NZ Superannuation's spend so high?
NZ Super is universal (no means testing), relatively generous (as our guide outlines), and paid from age 65. With 900,000+ recipients and an ageing population, it costs ~$17.6 billion per year - about 12% of all government spending. This will grow as the average age of New Zealanders increases.
How has government spending changed over the last 20 years?
A Treasury paper by Tim Hughes (Changing Patterns of Government Expenditure 2006-2025) examined spending trends since 2006. The headline finding is that health and retirement spending have grown as expected, but so have many smaller areas - early childhood education, housing support, corrections, and infrastructure. Meanwhile, tertiary education and defence spending have fallen (relative to GDP).
Why hasn't NZ Super blown out the budget already?
There are three main reasons:
- First, GDP grew faster than projected - high migration and more people working expanded the tax base.
- Second, governments made offsetting cuts elsewhere - KiwiSaver subsidies were been trimmed in 2025, and
- NZ Super Fund contributions were paused for years after the GFC before receiving government funds again in 2017 to help offset the increasing cost of NZ Super.
What government spending has actually been cut?
Relative to GDP, several areas have shrunk since 2006. Treasury's analysis by Tim Hughes identified these key reductions:
Know This: Some of these "cuts" were deliberate policy choices. Others happened automatically (fewer students, fewer sole parents). The concern is that many one-off savings - like pausing Super Fund contributions - can't be repeated.
- Sole Parent Support: Recipient numbers halved - linked to teen pregnancy rates more than halving (as reported by StatsNZ in 2023)
- KiwiSaver subsidies: Cut significantly after the Global Financial Crisis (and more cuts announced for 2026)
- Government Superannuation Fund: Winding down as members of the old public service scheme age out
- NZ Super Fund contributions: Paused for years after the GFC and resumed in 2017
- Tertiary education: Fewer equivalent full-time students meant lower funding
- Defence: Gradual decline relative to GDP, despite increasing security demands
Know This: Some of these "cuts" were deliberate policy choices. Others happened automatically (fewer students, fewer sole parents). The concern is that many one-off savings - like pausing Super Fund contributions - can't be repeated.
How accurate is this data, and what has MoneyHub done to verify it?
This data comes directly from the Treasury's audited Financial Statements of the Government, which received an unmodified audit opinion. It's the authoritative source for NZ government finances; however, some figures (like ACC claims liability) are actuarial estimates that can change significantly year to year.
Methodology and Notes:
How We Verified This Data:
All figures in this guide are taken directly from the Treasury's audited financial statements. To verify accuracy, MoneyHub:
Know This: The numbers are Treasury's - MoneyHub structures and explain what they mean (and what they don't).
Methodology and Notes:
- Key definitions: 'Total Crown' includes core Crown departments, Crown entities (Health NZ, universities, etc.), organisations, and investments. 'Core Crown' refers only to central government departments. 'OBEGALx' is the operating balance before gains and losses, excluding ACC - the Treasury's preferred deficit measure.
- Limitations: Some figures (like ACC claims liability) are actuarial estimates subject to uncertainty. Asset valuations are based on accounting standards and may differ from market values. The 'per household' calculations use approximately 2 million households.
How We Verified This Data:
All figures in this guide are taken directly from the Treasury's audited financial statements. To verify accuracy, MoneyHub:
- Cross-checked totals between statement summaries and detailed schedules
- Validated year-on-year changes against the prior year's published figures
- Reconciled functional classifications to published departmental breakdowns
- Confirmed debt calculations using the Treasury's published methodology
Know This: The numbers are Treasury's - MoneyHub structures and explain what they mean (and what they don't).
