This briefing outlines major political events that are scheduled to occur in 2025 and developments that can be expected in major policy areas. As always in politics and governance, unexpected events will occur and there’s no such thing as a crystal ball, but this summary gives a flavour of what is on the Government’s plate as it looks to the new year.
Key dates:
- 28 January: Parliament resumes for the year. The full sitting calendar is available here.
- 5-6 February: Waitangi Day celebrations. Politicians will be welcomed on to Waitangi grounds in Northland on the 5th, ahead of the anniversary of the signing of the Treaty on the 6th. Prime Minister Christopher Luxon has said he will not attend this year, amid opposition to his Government’s policies in relation to Māori.
- 7 February: The new resource management ‘Fast-Track’ will be open for new applications.
- 19 February: Reserve Bank meeting. The Reserve Bank board will meet to decide whether to continue reducing the official interest rate, and release new economic forecasts
- March: Cabinet to consider options for new interisland ferry plan.
- 20 March: December 2024 Quarter GDP statistics release.
- ‘Early 2025’: legislation to allow the resumption of offshore oil and gas exploration is set to be passed into law.
- ‘Early 2025’: Public consultation on the future of disability support funding.
- 1 April: Minimum wage to increase from $23.15/hr to $23.50. Benefits and superannuation will increase in line with inflation and wages, respectively. ACC levies increase. Full interest deductibility for landlords restored.
- 9 April: RBNZ meeting.
- 14 May: Principles of the Treaty of Waitangi Bill select committee report due to Parliament by this date.
- Mid-late May: Likely timing for the Budget (unconfirmed) which is usually released on a Thursday in late May at the end of the Parliamentary sitting session.
- 28 May: RBNZ meeting, with economic forecasts.
- 31 May: ACT Leader David Seymour to become Deputy Prime Minister, replacing Winston Peters. This is the first time a planned handover of the DPM role between coalition partners has been agreed in the coalition agreements.
- 19 June: March Quarter GDP statistics release.
- ‘Mid-2025’: Offshore Renewable Energy Bill due to be passed and regulatory regime implemented.
- ‘Mid-2025’: Local Government (Water Services) Bill due to be passed into law.
- ‘Mid-2025’: Stage 2 of the government’s RMA reform programme, the Resource Management (Consenting and Other System Changes) Amendment Bill due to be passed into law.
- 7 July: RBNZ meeting.
- 20 August: RBNZ meeting, with economic forecasts.
- 8 October: RBNZ meeting.
- 11 October: Election Day for local government elections.
- October: legislation limiting exotic forestry conversations on high quality farmland to come into effect.
- November: APEC Leaders’ Summit in South Korea.
- 26 November: RBNZ meeting, with economic forecasts.
- December: First Regional Deal to be finalised.
- ‘End of 2025’: Gene Technology Bill to be passed into law and gene technology regulation regime operational.
- ‘End of 2025’: Open banking regime to become operational.
- 17 December: Parliament adjourns for the year.
- Prime Minister Luxon has been invited to visit both China and India in 2025, dates TBA.
Politics
The Coalition Government has begun the year under some pressure given recent polling which shows a marked narrowing of National’s lead over Labour and the Coalition’s lead over the Parliamentary opposition.
Some polls show a Labour/Green/Te Pāti Māori majority or a theoretical Labour/Green/New Zealand First majority would be possible, as per the 2017-2020 government. The first public poll of 2025 showed Labour ahead of National (30.9% vs 29.6%) and New Zealand First in the kingmaker position.
However, it is still a long way until the next scheduled election, due in late 2026, with plenty of time for polling fortunes to wax and wane. No National-led Government has ever lost office in less than three terms, and only one former Prime Minister has managed to regain the office in the subsequent election after losing power (albeit, that was Keith Holyoake who went on to govern for four terms).
Te Pāti Māori has risen most in recent polls, on the back of large-scale opposition to the Principles of the Treaty of Waitangi Bill, with the Greens declining and Labour struggling to poll above the late 20s/low 30s. On the Government side, National’s support has declined and the partner parties’ support has remained steady.
Polling shows voters’ main concerns are cost of living, the economy, and healthcare.
Prime Minister Christopher Luxon’s popularity as preferred Prime Minister remains well below the levels achieved by his predecessors and has trended down in recent months, while Opposition Leader (and former Prime Minister) Chris Hipkins has edged up but remains below Luxon and lower than past Leaders of the Opposition who went on to win the subsequent election.
The mid-year change of Deputy Prime Minister, from NZF Leader Winston Peters to ACT Leader David Seymour may be a testing time. Peters has said that he will begin an 18 month election campaign once he is relieved of the duty, which may see him attempt to put more distance between himself and the other government parties.
Economy
Luxon has said that “2025 is all about a doubled-down focus on economic growth” and symbolically affirmed that focus by creating a new Ministerial portfolio, Economic Growth, for Finance Minister Nicola Willis, in which she will lead work by numerous ministers with business and economic portfolios within the Ministry of Business, Innovation and Employment intended to improve competition and increase growth.
This renewed focus has seen a slew of announcements including the creation of a new agency, Invest NZ, to attract and facilitate foreign direct investment by large international investors including sovereign wealth funds, including identifying potential regulatory barriers. Willis has made a number of announcements related to streamlining tourist visas. Both the Prime Minister and Minister of Finance have promised action on competition across the economy.
The economy ended 2024 with surprise GDP figures showing declines of 1.1% and 1.0% in the June and September Quarter figures, respectively – a much deeper recession than experts had expected.
Even prior to those latest numbers, the 2025 outlook had deteriorated, with Treasury forecasting growth of only 0.5% in the calendar year, and a continuing fall in per capita terms. Growth is forecast to come from export growth and increased private consumption, partially offset by declines in public consumption, residential investment, and business investment.
With job losses set to persist, unemployment is projected to continue to rise, peaking at 5.4%. Inflation is expected to fall below 2% and wage growth to drop below 3%. Net immigration will fall below 30,000 a year. Interest rates will fall, with the RBNZ expecting to cut the official cash rate to 3.55% by the end of the year, down from 4.25% now. House prices are expected to remain subdued until 2026.
On the international scene, trade will be the focus. Luxon has already visited the UAE to sign the new FTA, and is set to visit India in pursuit of a Free Trade Agreement, which is his Government’s top international priority. Luxon has also been invited to China in the first half of 2025. Balancing a good relationship with China while not getting on the wrong side of the new protectionist Trump Administration in the US will be a priority for protecting New Zealand’s trade interests.
Fiscals
The weaker economy means that forecast tax revenue for 24/25 and 25/26 has declined by $5.4b between last year’s Budget and December projections from Treasury. At the same time, the Government has been unable to fully realise its planned spending constraint due to the weaker economy increasing benefit expenditure and higher than expected school rolls increasing education costs.
The deficit is now projected to hit $13b under the new OBEGALx measure ($17b under the former measure), and a surplus is not projected until 2029. Net Government debt is now projected to rise to 43% of GDP in 2025 and peak at 46% in 2027.
As with the economic projections, Treasury’s December fiscal projections do not account for the weaker than expected GDP numbers in 2024.
Finance Minister Nicola Willis’ Budget Policy Statement 2025 affirms that the Government’s allowance for new operating spending (excluding automatic increases to superannuation and benefit payment rates) will remain at a net $2.4b a year – a marked reduction from the allowances under the previous Government. $1.7b of the allowance for Budget 2025 has been pre-allocated (mostly to health), leaving just $700m to cover cost pressures and any new spending initiatives the Government wants to fund. That amounts to 1% of affected spending. In HYEFU, Treasury notes that these tight numbers mean “savings will need to be sought to stay within the Budget 2025 allowance”. This would be additional to the $2.5b reduction in spending already booked through ‘top-down adjustments’ to agency budgets.
Willis will have to construct a Budget that all three governing parties can agree to. With the worsening fiscal and economic outlook, she is said to be looking at further, deeper cuts on top of those announced in Budget 2024 (Education Minister Erica Stanford has already signalled cuts are coming to that portfolio), and a delayed return to surplus. ACT is likely to push for deeper cuts and a more rapid return to surplus, while NZF is likely to be more focused on funding of public services, particularly health, and infrastructure investment.
Public services
Health: After steadily rising as an issue of concern for voters during 2024, the Prime Minister declared a “laser-like” focus on Health, replacing Health Minister Dr Shane Reti with Simeon Brown. Brown does not have a clinical background but is seen by the PM as politically astute and able to drive change. He will have a significant challenge to get the health system on track and out of the headlines. Minister Matt Doocey has been relieved of his other significant portfolios (including ACC) in order to focus fully on the Mental Health portfolio.
The first of the new cancer medicines that the Government has funded have become available from the beginning of 2025. The Government has pledged to make announcements on the future of Dunedin Hospital, after it announced it would pare back its redevelopment plans in 2024. The Government will also have to make decisions on how to proceed with a number of other health infrastructure projects, such as Whangarei Hospital. A number of health sector collective agreements have recently expired or will expire in 2025, raising the possibility of industrial action if government agencies are unable to meet health workers’ expectations around improvements to pay and conditions.
Education: Minister of Education Erica Stanford has said “Next year is going to be a tough year for me, because I’m going to have to make some very, very difficult decisions”. The state school system will see the rollout of new maths and literacy curriculums. The first charter schools will open under the Government’s new policy. Fees free study will move from the first year of tertiary study to the final year. There is the potential for strike action as the Ministry of Education recently made a 0 percent pay offer to school support staff, including teacher aides, and the teachers’ collectives expire in mid-2025.
Disability: Minister Louise Upston has signalled that public consultation will be undertaken in early 2025 around settings for disability support. The Government is focused on the rising cost of the support it provides and changes are likely to focus on reducing costs. At the same time, the issue of pay equity for care and support workers is set to come to a head as unions take the issue to the Employment Relations Authority.
Infrastructure
Fast-track: 2025 will see the new resource consent fast-track process come into effect. While Ministers will not have the final say on approvals as initially planned, they will be able to decide whether projects can proceed to that final sign-off. The new process will be an opportunity for the Government to argue it is enabling economic development and job creation, but may also spark opposition from locals who feel denied a say on controversial projects.
Regional Deals: The Government is planning to establish the framework for 30 year agreements between central and local government. The programme unlocks funding and resource opportunities to support councils to make improvements in their region, for example to roads, infrastructure, and the supply of quality housing. The first Deal is expected to be concluded by the end of 2025.
Local Water Done Well: As its replacement to the previous Government’s water reforms, the Government is making agreements with councils that separate their water management agencies from the councils’ balance-sheets, with the aim of preventing councils breaching their debt ceilings and allowing other financing options for water providers and regional amalgamation. Councils are due to present plans to the Government by 3 September.
Housing: The Resource Management (Consenting and Other System Changes) Amendment Bill will give councils the ability to opt-out of the Medium Density Residential Standards that enable greater densification in cities, if the councils can show they have provided for 30 years of housing growth in their district and unitary plans. The Government Building Programme will continue to wind down. The Government will make decisions on changes to insulation standards. Full interest deductibility for landlords will be restored from 1 April.
Interislander ferries: Luxon appointed Winston Peters Minister for Rail late last year and gave him until March to present a new plan for the replacement ferries after Finance Minister Nicola Willis scrapped the existing plan in late 2023 after costs escalated significantly. Willis had been steering towards a non-rail ferry option, with some level of private investment. Peters, in contrast, is a staunch advocate for rail and opponent of asset privatisation. It remains to be seen whether Peters can come up with a solution that satisfies his preferences, while being acceptable to National and ACT, who are focused on cost reduction.
Energy
Security of energy supply remains a major economic impediment, with the threat that New Zealand could see a repeat of winter 2024, where rapidly dwindling natural gas production (down 16% year on year) and low hydroelectric lake levels combined to send wholesale electricity prices soaring to up to 8 times their normal levels. Electricity futures contracts are trading at elevated levels, contributing to decisions late last year by a number of heavy industries to close factories or reduce production in 2025. There was an uptick in generators moving to construct planned solar and wind projects in late 2024, which may see increased building work in 2025.
The Government intends to pass legislation to enable new offshore oil and gas exploration in 2025, but officials note any new production is unlikely to come online until the mid 2030s. The Government is also moving to enable more rapid consenting of renewable electricity projects through the Resource Management (Consenting and Other System Changes) Amendment Bill.
Banking sector
In late 2024, Willis announced that the Government wants to see greater competition in the banking sector, with Government-owned KiwiBank playing a larger role. To that end, the Government has directed KiwiBank to seek private investors for up to $500m of capital, and said that, beyond 2026, share sales will be used to raise more capital. Willis also said “The big banks are on notice. The Government is explicitly leaving open the possibility of further action if we don’t see enough progress.”