The Government returned to surplus a year earlier than previously forecast in Budget 2026 — but ANZ's chief economist says the surplus is not a foregone conclusion, and Finance Minister Nicola Willis says she is still actively considering further tax measures on banks.
The Government opened the books on Budget Day expecting a return to surplus a year earlier than previously forecast. But on Friday, ANZ chief economist Sharon Zollner said that outcome was far from guaranteed.
"This budget is not actually an austere one, it's not a generous one either. It's a pragmatic kind of compromise between the here and now, and the future," Zollner said in an interview with interest.co.nz. "It's not at all clear that the forecast surplus will happen."
Her concern centres on Treasury's tax revenue assumptions. "The forecast for how much tax revenue the economy is going to bring in looks a bit on the sunny side to us, so there are definitely risks around the outlook in that regard," Zollner said in an interview with interest.co.nz.
The Budget update itself acknowledged downside scenarios. Treasury noted that if Brent crude oil prices rose to US$135 per barrel — a scenario it considered plausible — inflation would surge to 5.4 percent by September 2026, unemployment would peak at 5.8 percent, and the OBEGALx surplus would be $2.1 billion lower than the central forecast. "We consider that risks are skewed to the downside," Treasury said in the update.
Zollner described the broader economic picture as a "pretty tight spot." Higher costs for essentials are leaving households with less to spend elsewhere, and combined with low confidence and uncertainty about the direction of the economy, the risk is a consumer slowdown. "We're not forecasting recession. I don't think anyone is," she said. "But it is very frustrating at best for people feeling they've had the rug pulled out from them, just when things were actually starting to feel better."
Willis keeps further bank tax in play
Separately, Finance Minister Nicola Willis said she was "still actively considering the taxation of banks" beyond the prudential levy introduced in the Budget. The levy — estimated to raise $209 million over four years from banks, non-bank deposit takers, insurers, and financial market infrastructure providers — was a compromise between coalition parties. National and NZ First wanted to go further than ACT on bank taxation, though Willis declined to specify what additional measures were under consideration.
"As a National Party finance spokesperson — if this government isn't able to make further decisions on that — then I do expect that we will take policies to the [election] campaign," she said.
The surplus forecast and the bank's tax position both matter for mortgage holders and depositors. If the Government's books come under pressure and further bank taxes materialise, the cost could find its way into lending and deposit pricing. The RBNZ's May 27 OCR decision — a 5-4 split vote with markets now pricing earlier rate cuts — has already added complexity to the rate outlook for households.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.