Level of social assistance

IBISWorld forecasts the level of social assistance to fall by 0.2 percentage points in 2025-26 to 10.83% of GDP. New Zealand is looking to tighten spending in future budgets as the Government prioritises productivity and cost-saving measures. Although nominal spending on social assistance is increasing, it is unlikely to keep pace with GDP growth, causing the level of social assistance to fall over the year. Significant events like macroeconomic shocks and natural disasters can produce spikes in the level of social assistance. The Global Financial Crisis in 2008-09 resulted in a significant increase in social assistance due to a sudden rise in unemployment. This was further compounded by the 2010-11 Canterbury and Christchurch earthquakes, causing significant damage and loss of life, resulting in increased social assistance expenditure for those affected in the following year.

The COVID-19 outbreak was the latest large-scale economic shock to hit the New Zealand economy, and resulted in the highest single-year social assistance expenditure increase on record in 2019-20. This was largely due to the sharp economic downturn caused by the pandemic and the enormous fiscal response required to support individuals through the quarantine period. To restrict a rise in unemployment, the Central Government (Te Kawanatanga o Aotearoa) introduced the Wage Subsidy Scheme in March 2020 as a temporary measure to subsidise the employment of workers through the pandemic. The Central Government largely contained the virus and began scaling back support schemes as many businesses reopened. This reduction in government expenditure has been reflected in total spending on social assistance.

New Zealand's ageing population has placed increasing pressure on social assistance expenditure, particularly superannuation payments. To reduce the burden of anticipated rising superannuation costs, the Central Government established KiwiSaver (Poau he Oranga) in 2007 to allow individuals to more easily invest in their retirement, easing the burden on government-funded social assistance. According to KiwiSaver, nearly $10.5 billion was contributed to scheme providers in the 2023-24 financial year ending June, compared to just over $4 billion contributed in the 2013-14 financial year. Government contributions have also gone up from $737 million to $1 billion between 2013-14 and 2023-24. Up until June 2025, the government contributed $0.50 for every dollar a member pays into KiwiSaver, up to $1042.86. However, this contribution is reduced to $0.25 per member dollar from July 2025. This is further contributing to the fall in the level of social assistance over 2025-26. Overall, IBISWorld forecasts the level of social assistance in New Zealand to rise at an average annual rate of 0.02 percentage points over the five years through 2025-26.