Australian inspiration for Kiwi tax cuts: NZ minister

Finance Minister Nicola Willis will hand down the right-leaning coalition's first budget on Thursday, with a signature commitment of income tax relief.

Kiwis will find out the scale of their windfall at 2pm, with signs pointing to a smaller than promised amount during last year's election campaign.

In a major pre-budget address, Ms Willis said the relief would be "modest but meaningful", acknowledging the difficulties of delivering tax cuts during a recession.

Speaking to AAP, Ms Willis said NZ had no choice but to lower tax rates given Australia was doing the same.

"When I look over the ditch, I see a country that has had a centre-left government proudly putting as the centrepiece of its budget a big package of tax reduction," she said.

"We can't ignore that, turn the other way and do nothing to adjust our tax settings, which haven't been adjusted now in 14 years.

"It's a real reminder that we have to stay competitive, that talent has a choice where it wants to live and New Zealand needs to compete to keep people here."

Ms Willis said she "really worries" about the current brain drain during the country's double-dip recession - with GDP falling in four of the last five quarters.

In the year to March 2024, a record 128,000 migrants left the country, including 78,000 citizens - setting new all-time benchmarks.

About half - 53 per cent - of departing Kiwi passport-holders are heading to Australia.

Ms Willis said the tax relief had parallels to Australia's stage three tax cuts, first promised by Scott Morrison's government but amended by Anthony Albanese's administration to benefit those less well-off.

"In our campaign, we stepped away from a previous commitment to lower the top tax rate ... in favour of really focusing on middle and lower income families with children," she said.

"Our tax package has really picked up that gist which is working people on average incomes who really struggle with tax brackets unadjusted."

If there is an Australian scenario to compare to NZ's current fiscal offering, it would be 2014 - the last time the right-leaning coalition took power from Labor.

A decade ago, the Tony Abbott-led government set out to pare back major spending from the last administration while offering tax relief, just as Chris Luxon's coalition will do.

However, in 2014, Treasurer Joe Hockey was bludgeoned by the public for cutting too hard and lampooned for smoking a cigar in the parliamentary courtyard.

Ms Willis, who confirmed more than 240 projects will be defunded and about 4000 jobs will go in this budget, said the government wanted minimal impact on "frontline services" and entitlements.

"I've observed successive governments both in New Zealand and around the world grapple with this issue of how you ensure governments live within its means, but also protect the people they serve," she aid.

"That's why you've seen us setting bottom-line parameters for the kind of cost savings we will do like protecting frontline services.

"When you look around the world at governments who have tried to reduce government spending quickly, they haven't always made that commitment.

"In our budget, you'll see significant uplift in education spending, in health spending, in spending on police because we view those frontline services as critical."

Australian Associated Press