As New Zealand approaches the 2026 general election, Andy Loader questions the growing cost of government, the expansion of the public service and whether taxpayers can continue funding an ever-increasing bureaucracy. He argues that voters must distinguish essential public services from political promises that ultimately add to the national debt.
How much does New Zealand owe in debt?
As of late 2026, New Zealand's net core Crown debt stands at 40.9% of GDP, according to the latest New Zealand Treasury Year-End Financial Statements.
The exact amount New Zealand owes depends on whether you look at the government's sovereign debt or the entire country's non-government liabilities (which includes private mortgages and business debt).
Government (Sovereign) Debt
The New Zealand Government tracks its financial obligations using three primary metrics:
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Gross Debt: $223.8 billion (forecast for the 2026 fiscal year-end). This represents the total nominal value of outstanding government securities (like NZ Government Bonds and Treasury bills).
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Net Core Crown Debt: Roughly $187.8 billion as of recent interim updates. This is the primary figure economists use to measure the government's fiscal health because it subtracts liquid financial assets from total core liabilities. It recently experienced its first percentage-of-GDP decline since 2019, dropping down to 40.9%.
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Total Borrowings: $289.3 billion. This wider metric on the Crown balance sheet encapsulates all broader public liabilities, including Crown entities.
What is the cost of servicing debt?
Debt servicing cost is the total amount of money a borrower pays to creditors to cover both the principal repayment and accrued interest on a debt over a specific period.
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Definition: It includes all required payments for loans, bonds, and securities, covering interest, principal, and associated fees.
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Measurement: For governments, it is typically tracked as a percentage of tax revenue, total government expenditure, or Gross Domestic Product (GDP).
New Zealand's total weekly cost of interest payments for government debt is approximately $175 million to $195 million, based on annual debt-servicing figures of roughly $9 billion to $10 billion. You can review official fiscal data through The Treasury New Zealand portal.
The coalition government’s focus on the economy is currently showing some small benefits; following a period of large deficits and debt rising sharply, many of the Government’s key fiscal indicators are showing signs of improvement.
New Zealand recorded a Government Debt to GDP of 41.80 percent of the country's Gross Domestic Product in 2025 which has now dropped to 40.9% of GDP in late 2026.
Notwithstanding the drop in the debt to GDP ratio New Zealand's total net core Crown government debt currently sits at approximately $33,987 per person, with an annual interest servicing cost of about $1,716 per head of population.
Most people understand we pay taxes to keep the government functioning but over time the list of issues the government has to deal with has got longer.
Government has added issues that require strategies and staff to action. Examples being; climate change programmes, housing programmes, economic-development programmes, cultural programmes, advisory groups, steering groups, partnerships, engagement frameworks, etc.
While all of these issues need to be addressed in some form, they all cost money, and eventually you the taxpayer/voter is required to pay the bill through your taxes.
The Government recently proposed a cap on local body rates, with Local Government Minister Simon Watts telling councils to get “back to basics” saying that “nice-to-haves should never come at the expense of delivering the basics.”
In my opinion this would have to be one of the best proposals any government in recent times has ever made and it is way past time for all local bodies to get back to what they were originally put in place to deal with, “The Basics”.
Things such as; roads, rubbish, water, wastewater, stormwater, libraries, parks and the basic services needed to keep districts functioning.
The problem that I see is that successive governments have kept adding issues and all of those issues required more staff and more money so the end result has been the current situation where we now have a bureaucracy in place to deal with all of the issues but we the taxpayers/voters cannot afford the taxes to pay for them.
It is time that Government looked at its own spending and started to focus on the “Basics” instead of all of the “Nice to Haves”.
To make this happen we the voters should take the time to study what is being promised by each of the Political Parties and candidates and decide what we consider to be “Basic” issues or “Nice to Have” issues.
Because the bureaucracy will never describe anything inside government as unnecessary and will in fact claim; every strategy is important. Every programme delivers outcomes. Every partnership creates value.
But they all require staff to administer them. Public Service staff numbers increased rapidly over the two terms of the previous Labour government and have only dropped marginally under the present coalition government.
The core public service grew by roughly 34% (an increase of about 16,000 to 18,000 full-time equivalent workers) between 2017 and its peak in late 2023 under the previous Labour government.
Growth Breakdown (2017–2023/2024)
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Baseline in 2017: The core public service stood at approximately 47,251 to 48,000 full-time equivalent (FTE) employees.
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Peak in 2023: Staffing reached a peak of 65,699 FTEs in December 2023 following substantial expansion driven by new government functions, health reforms, and policy areas.
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Percentage increase: This marked an increase of over 34% across the core public service over that period.
Recent Reductions (2024–2026)
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Coalition cuts: Following the election of the National-led coalition government in late 2023, public spending targets and efficiency exercises led to downsizing across various departments.
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Current figures: By March 2026, the core public service workforce adjusted to 64,535 FTEs down from its 2023 peak, reflecting ongoing savings and job-reduction initiatives.
These growth figures are alarming. The increase in bureaucrats doesn’t mean better services, just more taxpayer money on an already overgrown public service.
Time and time again, we’ve seen public service delivery getting worse, while unions protest loudly at the mere thought of trimming the public service.
We saw a nearly 40% growth over the six years of the previous Labour government, and even with the slight decrease from the peak of 65,699 in December 2023, these numbers represent just a drop in the ocean.
We can’t afford to have public service numbers continuing to rise when true efficiency hasn’t been achieved. It’s time for the voters to send a message to all candidates and political parties that they will need to have policies which promise to cut spending and optimise the public service.
Did the taxpayers ever consciously agree to higher taxes required to fund the size of government we now have?
Yes, there have been elections every three years, but government expansion did not suddenly come about through one dramatic vote. It happened gradually. One programme here, another strategy there, another staff role.
Individually, each probably sounded reasonable at the time but collectively they created a much bigger government and public service, with the taxpayers getting the bill.
We the voters/taxpayers have the opportunity to decide which policies we want and which we will reject at the upcoming election and therefore it is imperative that we study the promises being made and ensure that we do not end up with a new tax and spend government.
If the voters genuinely want government to do all of those things that they are currently doing, then that will be their choice as seen in the results of the election.
But we still have to pay for those services.
What happens if we vote to reduce the size of the public service through getting back to basics?
Then the incoming government will be required to decide what they believe should be prioritised under the existing budgets and the public service will have to be reduced accordingly.
This process of reduction can be managed over time by a combination of the use of voluntary redundancies, retirements and new hiring policies.
The most important questions that we the voters need to ask ourselves in relation to the upcoming election are:
- What do we consider to be the basics?
- What are we prepared to pay for?
- Are the policies proposed costed and do those costs truly reflect the outcomes of those policies?
- Which policies will we vote for?