“The net capital allowance is NZ$4 billion compared to NZ$3.6 billion previously signalled in the budget policy statement,” Luxon said in a speech to BusinessNZ in Auckland.

“For Kiwis, it will mean another big investment in the quality frontline services, like health and education, they deserve,” Luxon said.

The government budget is scheduled for release on May 22.

Last week, finance minister Nicola Willis said baseline spending in the budget would be reduced to NZ$1.3 billion from a forecast of NZ$2.4 billion.

Luxon said this decision will be the smallest operating allowance in a decade and ensures the treasury can still forecast an operating surplus under the measure it introduced last year, which excludes the financial position of the government-owned accident health provider.

He added that budget 2025 was being delivered against a challenging international backdrop with trade tensions seeing growth forecasts being revised down across the world.

“The sharp deterioration of financial markets in early April have somewhat recovered in recent days and weeks, but markets remain volatile,” Luxon added