The government has freed up "billions" of dollars through additional public service cuts to be redeployed into "New Zealand's most pressing priorities".
Finance Minister Nicola Willis announced at a speech to the Hutt Valley Chamber of Commerce on Tuesday morning the government is halving its operating allowance - the new money it has available to spend at the May Budget - from $2.4 billion to $1.3b.
That will result in only a small number of government departments receiving additional funding this year with Willis characterising next month's Budget as "no lolly scramble".
"New spending initiatives are strictly limited to the most important priorities: our focus has been on health, education, law and order, defence, and a small number of critical social investments. We have also found room for modest measures to support business growth and to provide some carefully targeted cost of living relief," Willis said.
"We expect government agencies to adjust themselves to New Zealand's limited fiscal means. This will require restraint in public sector wage increases and an ongoing commitment to getting more impact out of every dollar spent."
Willis - with the help of associate finance minister David Seymour - has undertaken a significant savings drive ahead of the Budget to identify billions of dollars of spending that could be reprioritised.
"This has involved a line-by-line review of previous funding commitments, including money put aside in contingency. This reprioritisation exercise has required careful consideration and some tough, but necessary, choices."
With all that in mind Willis said it had put pressure on the government being able to stick to its fiscal strategy.
At the half year update in December a small surplus was expected in 2029, and Willis said it remained her intention to return to a surplus a year earlier if possible.
That all took place, however, before US President Trump's "Liberation Day" .
Despite that, Willis confirmed on Tuesday morning the government remained committed to that goal.
"Sticking to them has required some careful adjustments in this year's Budget. The key change we have made is to the size of this year's "operating allowance" - that is the amount of money put aside for new spending."
"This means we will be spending billions less over the forecast period than would have otherwise been the case. This will reduce the amount of extra borrowing our country needs to do over the next few years and it will keep us on track towards balanced books and debt reduction," Willis said.
"The fiscal forecasts will not be finalised until later this week, but according to the latest numbers I have seen, this smaller operating allowance means we will continue to forecast a surplus in 2029."
Labour Party leader Chris Hipkins told Morning Report the government may as well give public servants a ticket to Australia, "because Nicola Willis is hanging out a very clear sign there's no hope here for them".
The biggest cuts the government had made so far was cuts to investments in the future, he said.
Borrowing in the last budget for tax cuts was "absolutely reckless and irresponsible" and something the government could not afford then or now, he said.
