The Budget announced 10,000 new trade academy places
New Zealand's latest Budget redirects funding from the Fees Free program into trades training, a move employers say could help address future skills shortages through 10,000 additional trade academy places and new vocational courses for high school students.
The shift is part of a wider education package that reallocates some savings from the Fees Free scheme toward vocational education initiatives. Government ministers have said the program has cost nearly NZ$2 billion over the past eight years, with Budget 2026 redirecting part of the savings into trade-focused training and pathways for school leavers.
"The confirmed re-prioritisation of funding from the previous Fees Free scheme into trades training could go some way to filling future gaps in the trades, and enhance the work readiness of those leaving our schools and heading into skills and trades-oriented careers," said EMA head of advocacy Alan McDonald.
More routes into skilled occupations
The Budget allocates an additional $69 million over four years to Trades Academies, which allow secondary school students to pursue vocational learning through partnerships between schools, tertiary providers and employers while working toward NCEA or equivalent qualifications.
The funding will increase the number of available places from 10,000 to 20,000 by 2030.
The Budget also provides funding for around eight new trade-focused secondary school courses.
McDonald said the additional places and courses represented an effective use of funding previously allocated to Fees Free.
"The confirmation of an additional 10,000 places in trade academies and around eight new trade focussed courses for high school students is a good use of that Fees Free funding," McDonald added.
Alongside the Trades Academy investment, the government is using Fees Free savings to fund 1,000 additional Youth Guarantee places for school leavers with low or no qualifications. The increase will raise total capacity from 4,500 to 5,500 places.
Youth Guarantee programs provide fees-free vocational education through polytechnics, private training establishments and other tertiary providers, with pathways into apprenticeships, employment and further study.
Industry-led curriculum development
The new courses will be developed by Industry Skills Boards (ISBs), which received $15 million in Budget funding.
Government ministers have said the boards will create at least eight industry-led secondary school subjects linked to sectors such as construction and primary industries.
"The new Industry Skills Boards (ISBs) will develop those courses, backed by funding of $15 million. Hopefully, the additional funding of $90 million for the New Zealand Qualifications Authority (NZQA) will also see the Authority approve those courses more quickly than its current approval times, and get those courses underway," McDonald said.
The NZQA funding package includes support for qualification delivery, technology upgrades and work related to planned changes in secondary school qualifications. According to Budget allocations, NZQA received funding to support NCEA and Scholarship delivery, technology improvements and development work tied to future qualification reforms.
Economic forecasts remain in focus
McDonald said the Budget delivered several outcomes despite limited spending capacity and noted that revised economic forecasts were not as weak as many had anticipated.
"Getting back to surplus a year earlier than previously forecast (28/29) was a surprise, no doubt helped by the additional taxes and some of the savings identified in recent announcements about the public service," said McDonald.
Government forecasts now place GDP growth at 1.2% this year, down from 1.7%, before rising to a projected 3.2% in 2028.
"GDP growth for this year is down to 1.2% from 1.7%, and will still be challenging, especially reaching the 3.2% forecast in 2028. A lot is going to have to stabilise to make some of these predictions a reality. Unemployment also has a new peak at 5.5% in June this year, up another 0.1% (several thousand jobs) before dropping back," he added.
The unemployment rate is forecast to peak at 5.5% in June before easing.
Infrastructure projects receive funding
McDonald also pointed to infrastructure spending included in the Budget, particularly projects related to healthcare, education and transport.
"Firm commitments to Whangarei’s hospital upgrade and Dunedin’s outpatient clinic, plus buying the land for the new South Auckland hospital, are a boost for the health sector, in addition to land acquisition for 10 new schools," he said.
The Budget includes funding for upgrades to Whangarei Hospital and Dunedin's outpatient clinic, land acquisition for a future South Auckland hospital, and land purchases for 10 new schools. It also includes funding for additional classrooms and school infrastructure to accommodate population growth.
Transport spending includes the Cambridge-to-Piarere road extension in Waikato and more than NZ$1 billion for rail projects.
"Then you get the hard infrastructure like the Cambridge to Piarere road extension in the Waikato, and more than a billion dollars for rail. Road projects around Tauranga and the Waikato improve access to our ports for exporters, while changes further north also bring Northport more into the mix. It’s not clear where the spend on rail upgrades will go, but improving rail connectivity for both Auckland (a fourth main line) and Northport should be among the priorities,” said McDonald.
"There wasn’t much to spend, but some of those priorities look to the longer-term," he added.
For employers, the Budget's workforce-related measures center on increasing participation in vocational education through Trades Academies, industry-developed school subjects and Youth Guarantee programs, with the aim of creating additional pathways into skilled trades, apprenticeships and employment.
