Finance Minister Nicola Willis urges Labour to pledge retention of her Investment Boost policy if they win the November 7 election.
The boost lets businesses deduct 20% of a new asset’s value from taxable income, in addition to standard depreciation.
Launched in May, the policy was projected to lift New Zealand’s GDP by 1%, wages by 1.5%, and capital stock by 1.6% over the next 20 years.
In a speech to the New Zealand Economic Forum, Willis highlighted the policy’s early impacts, noting that about 40% of firms planning investments in the next five years reported the policy boosted their spending over the past 12 months—29% moderately and 11% significantly.
Looking ahead, 49% of firms planning investments in the next five years said the Investment Boost is positively shaping their plans, with 14% anticipating a major boost.
“These are not theoretical ideas,” Willis said. “These are real businesses making real decisions earlier, larger, and more productively because their incentives have changed.”
“That matters because capital deepening is how productivity rises, and productivity growth is the only way we will grow wages sustainably over time.”
The minister said the policy would succeed only if businesses trusted its longevity.
“Firms do not invest in long-lived capital, plant, machinery and buildings if they think the tax rules may change at the change of an election.”
She urged Labour leader Chris Hipkins and finance spokesperson Barbara Edmonds to pledge against scrapping the policy.
“Will they commit to retaining Investment Boost as a permanent fixture of our tax settings to unlock growth, or will it be sacrificed to fund higher spending? This government’s position is clear.”
“I would put to you that those who say they are on the side of growth and productivity but would sacrifice this effective policy are speaking out of both sides of their mouth.”