I attended Budget 2026 with a parochial Otago Central Lakes (Queenstown Lakes and Central Otago) perspective. Rather than the typical macroeconomist approach of comparing crystal balls and posturing for soundbites about what may or may not be, I took a different approach. My intent of the day was to quickly establish a cheat sheet of what was in Budget 2026 for the growth engine of the south – Otago Central Lakes – centred on the golden triangle of Queenstown-Wānaka-Cromwell. In other words, I wanted to know “what’s in the Budget for us?”.
Against a backdrop of rampant growth that is quickly exposing infrastructure bottlenecks and risking the quality of life and experiences of locals and visitors alike, these Budget understandings for the local area matter. As we await the outcome of regional deal negotiations between the Government and the Otago Central Lakes’ councils (QLDC and CODC, with ORC as the passenger), the Budget offered the opportunity to see what funding crumbs might be available for when that deal lands.
Budget 2026 was released against a tightrope of a government having the desire to quickly return its books to surplus, while the economy grapples with an oil price shock that has slowed the economic recovery and caused an inflationary spike. The Treasury’s economic forecasts for the government have been premised on a relatively quick resolution of the geopolitical situation, which sees New Zealand’s economic recovery delayed rather than derailed. I have some scepticism as to whether the shock will pass through as quick as the Treasury boffins are anticipating, but given the unpredictability of Trump and his foes, who am I to guess?
I could go on all day about the ins and outs of the economic and fiscal projections in the Budget, but I will leave that to other economists, analysts, and media commentators. Instead, I will turn back to my parochial Otago Central Lakes focus. I really want to know “what’s in the Budget for us?”.
Key initiatives of note for Otago Central Lakes
The spoiler alert for Otago Central Lakes is not what was there, rather what wasn’t. There was no hook, line, and sinker confirmation of where the regional deal will land. I worry given that the Auckland and Western Bay of Plenty deals read more like MOUs of intent to work together, rather than fully fleshed out commercial contracts, there might be a lack of substance in what we end up with. But I can live to hope! Nevertheless, despite this engrained cynicism, there were at least still a few initiatives in Budget 2026 which will be directly beneficial for Otago Central Lakes.
Housing consents revenue windfall
The big announcement in the Budget for Otago Central Lakes was a new scheme called “The Incentives for Growth Fund”. This new fund essentially pays local authorities for consenting more houses, with a tiered incentives system that escalates the more houses you consent relative to your existing housing stock. The Fund allocates $400m over four years, and under the scheme, councils will be paid more per home as they consent more homes:
- For each new home consented up to 1% of the existing dwelling stock, councils get 0.25% of the national average consent value.
- For consents between 1 and 2% of the dwelling stock, this cashback rises to 0.5% of the national consent value.
- For consents above 2% of the dwelling stock, the cashback rises further to 1.25% of the national consent value.
For Queenstown Lakes in particular, which consents housing at around 5 times the rate of the New Zealand per capita average, this initiative could be a windfall revenue gain that fundamentally begins a shift to the books for Queenstown Lakes District Council. My back-of-the-envelope calculation (see below) is for this to equate to $30-$40m in total over an initial four year period for Queenstown Lakes District Council, with Central Otago District Council not yet costed and on top of this.
The challenge with this money, however, is that it is premised on ongoing growth – you don’t get the funding to help with business-as-usual, rather you only get the money if you keep growing and get a lot more if that growth is fast. The key challenge for Queenstown Lakes is not just delivering services as a function of new houses for residents, but as New Zealand’s tourism mecca the unfunded challenge is servicing the large number of visitors who dictate much of the demand on infrastructure. On any given day, more than half the people in Queenstown Lakes are visitors, many of whom are residing in commercial accommodation, rather than a residential dwelling. A visitor levy would be a more appropriate way of collecting local revenue to fund local infrastructure demanded from this key user group.
Putting aside my desire to have a visitor levy, rather than this returning of a share of the value of each new building consent, I am at least happy there is some money in the Budget that gives new sources of revenue to Queenstown Lakes and our Central Otago peers.
In the Budget lockup environment, my maths ability has been somewhat limited to back-of-the-envelope, as I couldn’t download data from the internet to refine estimates. Nevertheless, I have come up with some basic estimates, and have been informed by Treasury officials that the Ministry of Housing and Urban Development has much more detailed modelling of the likely value of the Incentives for Growth Fund for each local authority in New Zealand which can be requested.
Over the past 12 months, Queenstown Lakes District has consented about 1,800 new dwellings which is equivalent to give or take 5% of its dwelling stock. This figure is a rounded estimate from Statistics New Zealand which considers individual dwelling units consented, rather than each residential consent application, it is to be hoped that this is the approach government follows as it is common for a consent application in Queenstown Lakes to have two dwelling units (i.e. both a home and a residential flat).
If we assume an average national value of $500,000 per dwelling consent, then such consenting volumes could mean additional revenue of $8m to $10m a year in Queenstown Lakes, or around $30 to $40m of total additional revenue over the next four years. Central Otago District’s potential additional revenue has not yet costed by me, but would be on top of this.
My concern with this windfall gain, is that strict parameters need to be established surrounding how it is spent and what infrastructure that spending is tied to. I would hope that both Queenstown Lakes District Council and Central Otago District Council can consider how much of this new funding can be put towards shared areas of infrastructure concern identified as part of the regional deal expression of interest process. That way the new revenue can lead to a legacy which better equips the region to carry its existing and potential future demand, rather than falling into a bucket of day-to-day spending on existing operational pressures.
Other housing-related initiatives
There were other housing-related initiatives of interest to Otago Central Lakes related to Resource Management Act (RMA) reform and to social housing funding. These initiatives were not nearly as defined as The Incentives for Growth Fund, nor did they have a clear line of site to how exactly they financially benefit the region.
Budget 2026 has announced the investment of $294m over four years to support the Government’s new planning system that replaces the RMA. Progress on these reforms is highly relevant to Otago Central Lakes which is currently issuing the third largest number of building consents in the country behind only Auckland and Christchurch. Given the new planning system is premised on people being free to use their property unless there is good reason to restrict them, it is anticipated that the new planning system may further open the potential for housing to development more rapidly than is currently enabled through existing district plans.
Budget 2026 also announced a further $69.2 million into the Flexible Fund to deliver additional social homes starting from 2028/29 until 2029/30. This funding was on top of existing funding already made available from Budget 2025 for 2026/27 and 2027/28. The funding lift gives certainty to community housing provides that they can plan their build pipeline further ahead. This certainty will be welcomed by the Queenstown Lakes Community Housing Trust (QLCHT), which has a 1,500 or so waitlist of households awaiting access to housing delivered by the Trust. However, it is not yet clear, how many homes the QLCHT will be able to secure funding for the construction of. Furthermore, it is well-known that the Trust’s biggest challenge is not just funding the build process, it is being provided with the land to build on in the first place in a zero to low-cost manner.
Significant roading resilience focus for Otago Central Lakes
Funding of $400m has been set aside for State Highway resilience projects. There were nine projects identified, of which four directly or indirectly benefit Otago Central Lakes. This resilience funding will improve the reliability of the roading network for visitors, workers, and supply chains alike, as well as provide economic stimulus to civil contracting firms as the work is being undertaken.
There were three projects that directly benefit Otago Central Lakes:
- SH6 Cromwell to Frankton
- SH6 Frankton to Kingston
- SH6 Haast to Hāwea
There was also one project that indirectly benefits Otago Central Lakes on SH94 from Milford to Te Anau, given that Milford is one of the key day visit destinations for tourists in Queenstown.
Although not identified in Budget 2026, it is worth noting that a few weeks ago the Government also approved $12.6m for a new SH6 walking/cycling bridge in Queenstown, explicitly linking it to schools, workers, tourists and Queenstown’s cycle tourism sector.
Is Queenstown finally getting its second high school?
With rampant population growth, comes exploding school rolls. We know we need multiple new primary schools. We also know that the new Whakatipu High School, opened less than 10 years ago is already undergoing its second major expansion since opening.
A new high school is desperately needed, and while the details are still scant, Budget 2026 did release $310m of new capital budget for new school projects and land acquisition. Queenstown was explicitly identified in a budget media release as being included in the fund for “the acquisition of land for future school sites in high growth areas such as Queenstown”.
Wilding pine control is a conservation win
Although it had already been preannounced, Budget 2026 includes an extra $109m over three years for wilding pine control. Otago Central Lakes areas were named among the nine priority regions, with about $30m of the initiative funded through the International Visitor Levy. This is directly relevant to landscape amenity, biodiversity, fire risk, water catchments, farming productivity, and the visitor economy.
And that’s all folks
Unfortunately, from my reading of Budget 2026, this was about the end of the road of policies where I could readily identify a direct line of site for regional benefit to Otago Central Lakes. There will be many policies I didn’t assess that may help certain sectors, or demographic groups, but none which area specifically focussed on key issues in our local area.
It is worth noting, that although I did not find anything in the Budget specifically related to health in Otago Central Lakes, the Government had already announced planning to expand locally delivered healthcare in Wānaka, Cromwell, Queenstown and wider Otago Central Lakes. That announcement had included Health NZ agreeing in principle to $25m operating from 2027/28, around $103m over the following three years, and $52m capital, with this funding presumably to come from existing appropriations or to be included in Budget 2027. This expansion to health services matters for labour attraction, population growth, and reducing the inequity and health risks associated with the area’s large distance from base hospitals.
I had hoped that there would be something in the Budget for tourism infrastructure, but we were left waiting. That was a key gap for me in Budget 2026 that is misaligned to the pressures we are facing and the important role that tourism plays in boosting cashflow in the New Zealand economy. Tourism’s ongoing strong growth is especially needed at a time where domestic consumption, business investment, and government spending are playing a subdued role in the New Zealand economy.
And so what’s the key takeaway?
The key takeaway for Otago Central Lakes is that the Government is slowly listening to our needs, despite no silver bullet being announced. Even though the new revenue tied to housing consents wasn’t the exact funding mechanism we had hoped for, at least the Government is sharing some more revenue that will benefit our region. The real trick will be making sure that we apply the funding in the right way to invest in the right things.
We have also seen progress on education, health, and roading infrastructure, although the big kahunas of a new base hospital and new major transport infrastructure (such as bridge replacements at key bottlenecks) do not yet have a clear line of site.
But the elephant in the room for me remains – how do we get the visitor sector to pay for its share of the pressure it puts on local infrastructure? That pressure is something that is felt not only by locals, but it also undermines the quality of the visitor experience we are trying to cultivate. A visitor levy just makes sense, it’s the ultimate form of user pays, where the visitor can get instant gratification of using the very infrastructure that they are funding and seeing the positive impact their visit can have on the day-to-day lives of locals.