Did Budget 2026 short-change the South Island?

South Island Minister James Meager. Photo: RNZ / Samuel Rillstone
South Island Minister James Meager. Photo: RNZ / Samuel Rillstone
South Islanders have broadly given Budget 2026 the thumbs up - though there are caveats.

Mentions of Te Waipounamu were sparing in the Finance Minister's speech on Thursday with a handful of towns getting a mention, mostly in the context of roading projects.

State Highway 60 at Tākaka Hill, State Highway 6 from Cromwell to Frankton, Frankton to Kingston and Haast to Hāwea, and State Highway 94 from Milford to Te Anau will benefit from $400 million of funding to increase state highway resilience across the country.

The other noteworthy items for the south are plans for the government to buy land in Queenstown for schools and a new police station in Greymouth.

South Island Minister James Meager said it was a firm but fair budget that delivered for the people of the South Island.

"It secures our future," he said.

"It's a good balance between the need for fiscal constraint alongside investment in key priorities. So for us down in the south that's the same as everywhere else - health, education, law and order, and infrastructure - and there are some specific projects that benefit us directly but overall the budget is a good one for New Zealanders and, therefore, for South Islanders."

The government had introduced a new $400m Incentives for Growth Fund with councils receiving payments based on how many houses were consented.

It could be a boost for the south, Meager said.

"The high-growth parts of the country - so areas like Christchurch, Selwyn and Queenstown - that have growing pains, if they are to be zoning and consenting more housing they are going to be benefiting from this policy," he said.

"That all goes back into local infrastructure and local resources so this should be a really positive, exciting part of the budget for councils who have been calling out for funding mechanisms for years and they now have them. So our message to them is get on with it, zone more houses, consent more houses and they will feel the benefit of that."

Selwyn was the country's fastest growing district with the population jumping 29 percent from 2018 to 2023.

Selwyn mayor Lydia Gliddon. Photo: RNZ / ANNA SARGENT
Selwyn mayor Lydia Gliddon. Photo: RNZ / ANNA SARGENT
Selwyn mayor Lydia Gliddon said the fund was a nice surprise but did not go far enough.

"It's probably a good start but it's potentially not going to go as far as what it actually needs to, to fund growth within our districts," she said.

"If you run some numbers there could be potential for us to get around $9 to $12m and, yes, that is still a fair amount of money. But when we looked at the GST back on new builds, if it was 50 percent that would be $49m back to us to fund infrastructure related to growth. So I feel like it's a step in the right direction and we've just got a long way to go to get that fair share to fund growth infrastructure."

Central Otago mayor Tamah Alley said it seemed central government was finally listening to local government on growing pains.

"It feels like the first time central government has realised local government can't deal with this growth challenge on our own and they are actually willing to stump up some money to help us build the infrastructure that is needed to enable the growth that comes with more houses," she said.

"There's no point building hundreds of extra houses, and in some cases thousands, if you can't provide the infrastructure to support the people who are then living there."

She was also pleased with health and roading funding for the area.

But she thought the budget left the South Island a little short-changed.

"Primary industries are pretty much carrying our country at the moment and it would be great to see more going into how we move our people around and how we support our people who are living here. But I think in these incredibly constrained times fiscally across New Zealand and across the world then it's not time to be splashing the cash too much," Alley said.

Queenstown Lakes mayor John Glover said he was disappointed the government continued to ignore his area's plea for a bed tax or visitor levy.

"Each year we are paying tens of millions of dollars in operating and capital costs to provide infrastructure and services that tourists use that we are not good at capturing the costs of," Glover said.

"That policy is not supported by the coalition, but all other things being equal that is the thing that I'd do that would make a difference because I wouldn't be taking money from one part of government and trying to give it to local government.

"A bed tax is new money and it's something that visitors pay right throughout the world. They're quite shocked when they come to New Zealand and find they don't have to pay anything else locally, so we've got a willing audience and we just need to collect some modest amounts from them as they travel around the country to provide the experiences they have come here for in the first place."

Meager said he had heard those in support of the measure but it was not in the government's plans.

Business Canterbury chief executive Leeann Watson said she had also hoped to see more for the South Island in the budget.

"We're a little bit disappointed," she said.

"I certainly support the infrastructure investment and building resilience. That investment in resilient infrastructure is needed but we also need to get ahead of the curve by not simply fixing what's already broken but making sure we invest ahead of demand so that we can keep growing the regions that are growing and that is certainly the position Canterbury is in."