Budget 2025, Socialism, Neoliberalism, and the Greens Budget

Free dental sounds great, of course it does. You’d be hard-pressed to find anyone who doesn’t want universal care. Until you meet the Public Finance Act.

It’s nice to be back in the fray, and what better way to return than with one of New Zealand’s annual political rituals: Budget 2025 - The Growth Budget. It’s due out on 22 May, and in this piece I’ll throw in my two cents by comparing the government’s budget with the Green Party’s alternative.

My aim is to offer a balanced (or at least alternative) way of making sense of this massive political and economic moment. Quick disclaimer: I’m not an economist. I’m coming at this like any everyday New Zealander trying to understand what all this actually means.

Socialism vs. neoliberalism? Free dental vs. fiscal discipline? Let’s unpack it.

The Green Budget: Aspirational or Impractical?

The Greens have unveiled a budget that promises free GP visits, free dental care, free early childhood education, and an income guarantee to ensure no one falls below the poverty line. It’s a vision of a future where everyone has what they need, and it’s undeniably appealing, romantic, poetic even. Who would be brave enough to argue against this moral grandstanding? Well, we should becase as poetic and beautiful as that sounds, that’s not actually how anything works. Anything.

The Greens’ budget is built on the idea that we can fund these initiatives through fair taxation, including wealth and inheritance taxes. However, they’re not part of the governing coalition, which means they don’t have the leverage to implement these policies, and they never have.

And that assuming we can ever tax wealth effectively, a topic for another time. I agree we must increase our tax revenue, but through capital gains tax or land tax. Wealth tax? So ineffective. Also, until they can negotiate their way into a coalition agreement, which they haven’t been able to do ever, their budget remains a poetic wishlist rather than a political roadmap.

Moreover, their rhetoric implies that those who don’t support their budget don’t care about children, health, or climate change. That’s so problematic for so many reasons and my main beef with them. Many of us care deeply about these issues, you’d be hard pressed to find anybody that genuinely isn’t. But we need to recognize the constraints of our current tax framework, political scaffolding, the need for fiscal responsibility and their competence. Or we are just living in a Green Party DisneyLand type universe.

Budget 2025: Fiscal Discipline or Austerity?

Now let’s turn to the actual Budget 2025, the one being delivered by the government elected under MMP, fair and square. A reminder for those who seem to forget that: they won, they get to govern, they get to spend. Yes, of course the opposition should challenge them—that’s how democracy works—but maybe let’s aim for critiques that are a bit more grounded in reality, rather than the endless moral grandstanding that comes from the Left just does my head in. Not becase they are wrong, but becase they do not hold a monopoly on morality. Ok, back to the Budget.

The baseline operating allowance has been cut from $2.4 billion to $1.3 billion, with the goal of getting net core Crown debt trending downward towards 40% of GDP. The government is also signalling a clear focus on productivity, the cost of living, and creating more jobs and wealth for New Zealanders. It’s prioritising “efficient, effective, and responsive” public services, especially in health, education, and law and order. This is exactly what they campaigned on. It’s consistent and aligned with the coalition agreements. No surprises here, and that’s not a bad thing.

They’ve also announced a $190 million Social Investment Fund, targeting vulnerable communities through early intervention and measurable impact. This is smart policy, in theory. Will it work perfectly? Probably not. But nothing ever does in government, regardless of who’s in charge. Im cautiously optimistic about what the Social Wellbeing Agency will deliver, time will tell.

Critics say this is a return to austerity and that it lacks vision. The government says it’s about restoring fiscal discipline and long-term sustainability. And honestly? They didn’t campaign on “more.” They campaigned on “less.” They’re governing accordingly. Whether or not you agree with their approach, there’s something to be said for political consistency. I know that’s a hard pill to swallow for some, especially in Wellington, but that consistency is part of what keeps the system stable, and the country governable. We must remember we don’t all care about the same things, and we all deserve to be governed for.

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Now, a few definitions to help us untangle some of our political understating when talking about Budget related topics. Im defining, high level, these terms because we throw them around a lot, often incorrectly, and it’s making political conversations more confusing than they need to be. Let’s give these ideas some proper scaffolding. None of this is exhaustive, but it should help us stay a little more grounded when we’re debating budgets, taxes, and what government should or shouldn’t be doing.

Left Fiscal Ideology

This approach sees government as a key player in reducing inequality and promoting wellbeing. It supports higher taxes (especially on inheritance and high incomes), stronger public services, centralized management of resources, through things like welfare, free education, and universal healthcare. It’s rooted in the idea that the state has a moral responsibility to level the playing field and protect people from the downsides of market forces. And that the state is the best institution to achieve these goals.

Right Fiscal Ideology

The Right, broadly speaking, tends to view government as a backstop, not a central institution. This ideology favours lower taxes, smaller government, and more individual responsibility. The belief is that free markets create efficiency, innovation, and personal freedom, and that too much state interference slows growth and discourages self-reliance. It’s not that the Right doesn’t care about public services, it just thinks the market can often do them better or cheaper. A common mistake I hear folk have about the right is how narrow their definition of the market is. The market is not just banks and KPMG, its all non-government institution like not for profits, community groups, schools and churches.

Centre Fiscal Ideology

This is where most governments try to land. It’s the “yes, and…” space. Centrist fiscal thinking accepts the need for a strong public services and redistribution, but also places a premium on fiscal discipline, balanced budgets, and economic growth. Centrists are often the ones saying “we can’t afford everything, so let’s prioritise.” It’s about managing trade-offs, not chasing ideological purity. And in an MMP system like New Zealand’s, centrism is often where coalitions end up living, whether they admit it or not. I’d like to see money spent on our growing aging population, our disabled communities and productivity and jobs, for example.

Neoliberalism

Neoliberalism gets thrown around a lot, usually as an insult, but at its core, it’s an economic philosophy that has created the wealth that most of us are currently chasing and wealth our parents thrived with. It became dominant in the 1980s. Think Reagan, Thatcher, and yes, New Zealand’s Rogernomics. It’s all about free markets, globalization, deregulation, privatisation, individual responsibility, and reducing the role of the state in the economy. In practice, it’s meant lower taxes, leaner public, open boarders, encouraging immigration and emigration, technological developments, and a belief that competition breeds efficiency. It’s not inherently evil, but it can be poorly applied, and often is.

Tax Reform

This just means changing how taxes are collected and who pays them. Tax reform can go in many directions: lowering income tax, introducing a wealth tax, expanding GST, adding environmental levies, you name it. In NZ, tax reform is the hot potato no one really wants to hold. Everyone says they want it, but no one agrees on what “fair” looks like. That’s because tax is always political: it’s about power, priorities, and trade-offs.

Socialism

Often misunderstood (especially in New Zealand, where anything vaguely collective is called “socialist”), socialism is a political and economic ideology that prioritises shared ownership of resources, redistribution of wealth, and reducing inequality. You can have democratic socialism (like in parts of Scandinavia), or more centralised, state-controlled versions (like the ones that haven’t ended well). At its core, socialism asks: how can we ensure that everyone has what they need, not just what they can afford?

Capitalism

This is the system we currently live in. It’s based on private ownership, free markets, and profit as the primary driver. Businesses compete, consumers choose, and wealth is accumulated based on your ability to produce, sell, or invest. Capitalism isn’t inherently unjust—but without guardrails (like strong public services and progressive taxation), it tends to concentrate wealth and widen inequality. That’s where the debate usually sits: how do we make capitalism work better for more people?

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As a non-economist, I find this all incredibly complex. But I believe that understanding the basic structures of government and the limitations of our tax framework is crucial. We need to have honest conversations about what we can afford and how we can best serve our communities, and who is best placed to serve them. In my view not always the government, regardless what side of the pendulum we are swinging.

Talk soon, Nat