Integrity Briefing: “Investment Boost” or “Corporate Welfare”?

The centrepiece of New Zealand’s 2025 Budget is a massive business tax incentive grandly titled “Investment Boost.” By the Government’s own admission, it’s inspired by the Muldoon-era “Think Big” schemes – and it shows. The policy allows businesses to immediately deduct 20% of a new asset’s cost from taxable income, on top of normal depreciation. In theory, this is meant to spur investment, productivity and wage growth. In practice, it’s an uncapped, potentially bottomless subsidy to capital.

Finance Minister Nicola Willis has budgeted $6.6 billion over four years for the scheme (roughly $1.7 billion per year), but crucially, there is “no limit” on the amount firms can claim. As Willis herself touts, businesses can invest at any scale and still get the 20% write-off, with “no cap on the deduction amount”.

No cap. Those two words have sent even seasoned observers reeling. Inside Parliament on Budget night, ministers struggled to comprehend the sheer scale of what they’d signed off. For the best media article on this, see Jonathan Milne’s Govt’s ‘Think Big’ Investment Boost: There. Is. No. Limit.

According to this report, NZ First Minister Shane Jones left his own Budget party to double-check with colleagues whether it was really true that “there was no cap on the size of an asset” eligible for the 20% deduction. Indeed it is true: Willis has not set any upper bound on the expenditure that can be subsidised. The Inland Revenue’s regulatory impact statement frankly acknowledges that consultation on the scheme's design didn’t occur, and that there is no clear plan for what happens if (or when) costs exceed the budgeted $1.7b per year. In Willis’s optimistic rollout, “there is no limit” for businesses – “at least, until there is a limit,” as Milne dryly noted. See also Milne’s Ministers don’t know the scale of the tax break they’ve signed up to (paywalled)

Such open-ended generosity is virtually unheard of in modern fiscal policy. Tax experts are astonished. John Cuthbertson, NZ Tax Leader at Chartered Accountants ANZ, remarked the depreciation giveaway is “quite a bit more generous than we expected” – far broader in scope and lacking the caps that prudence would suggest – see Pattrick Smellie’s One-off 20% write-down on new assets (paywalled)

Even Terry Baucher, a veteran tax commentator typically supportive of pro-investment incentives, was taken aback that “there is no cap on this allowance,” calling it a “welcome (and a little surprising)” move – see his column, Budget’s investment boost tax incentive one of the bolder tax initiatives in recent years

The surprise betrays an implicit question: why on earth would a government expose taxpayers to an uncapped liability? It only takes “a handful of billion-dollar oil rigs or commercial developments to swallow up most of that money in any given year,” as Newsroom’s Jonathan Milne observed.

Indeed, a single mega-project – say, a new offshore drilling platform or a large commercial tower – could instantly claim tens or hundreds of millions in upfront deductions, shrinking its tax bill at public expense. With no overall spending cap, the theoretical exposure of this policy runs into the billions, far beyond the $6.6b sticker price. Even officials concede that “variations in [key factors] can materially affect the fiscal and economic impacts”, meaning the cost could easily blow out.

Even oil rigs and buildings qualify for tax breaks

Not only is Investment Boost uncapped, it’s also remarkably broad-based – arguably too broad. The scheme applies to “most new assets that are depreciable for tax purposes,” extending well beyond just factory machines or tech equipment. In fact, Willis made the incentive unusually inclusive, covering asset classes that many other countries deliberately exclude from such accelerated depreciation schemes.

Commercial and industrial buildings, for example, qualify for the 20% upfront deduction under Investment Boost. This is despite New Zealand having only recently removed depreciation on commercial buildings in 2020. Re-instating a tax break for commercial property in this form is highly controversial. As Baucher noted, it is “somewhat ironic” – after previously scrapping building depreciation, the government is now effectively front-loading a chunk of it for new builds. Internationally, fast depreciation or “full expensing” regimes usually exclude buildings (which have very long useful lives) to prevent massive revenue losses. New Zealand’s scheme, by contrast, welcomes even big property developments into the tax-break feast.

The inclusion of oil, gas, and mining assets is even more striking. These were nowhere in the public press releases, but buried in the fine print the Government quietly added petroleum and certain natural resource assets to the eligible list. That means a company could, for instance, invest in new oil drilling rigs or mining equipment and instantly write off 20% of the cost against tax. This is extremely generous for extractive industries – so generous that it might violate international agreements, essentially functioning as a fossil fuel subsidy.

The decision raised eyebrows within the Government itself. As Jonathan Milne reports, Finance Minister Willis actually declared a conflict of interest. She recused herself from the petroleum inclusion, since her father is a lawyer for oil and gas interests. (Associate Finance Minister Chris Bishop signed off that part instead.) It is appropriate that Willis followed conflict-of-interest protocol, but the optics are still troubling: the Finance Minister’s family stands to benefit from a lucrative new tax break she championed, underlining perceptions of a government entangled with vested interests.

Resources Minister Shane Jones could barely contain his glee at the oil and gas giveaway. Newsroom has reported that Jones – whose NZ First party campaigns on reviving extractive and regional industries – was “jubilant” that mining assets made the cut, crowing that the policy “certainly has elements of Muldoon’s development” approach.

It appears targeted lobbying paid off. Jones and NZ First had openly pushed for natural resource sectors to be included in any investment incentive, arguing that big capital projects up north (oil rigs, mining, forestry, etc.) needed a boost. With Investment Boost, they hit the jackpot.

The inclusion of petroleum assets, in particular, was not advertised to the public on Budget day – likely to avoid backlash – but make no mistake, it was tailor-made for the fossil fuel industry’s benefit. Added to this, certain primary sector improvements (like agricultural fencing, horticulture planting, aquaculture facilities) also got special inclusion. The wishlists of multiple industry lobbies were granted in one fell swoop.

As Milne has reported, even earthquake-strengthening work may qualify for the 20% deduction – a boon to commercial property owners facing seismic retrofit costs. In essence, nearly every big-ticket capital expenditure a business might undertake – from building a new warehouse, to importing heavy machinery, to outfitting a new oil drilling platform – now comes with a hefty taxpayer-funded sweetener upfront. The breadth of eligible assets far exceeds analogous schemes overseas, which are typically temporary, capped, or focused on specific asset types (like manufacturing equipment or tech, not real estate or resource extraction). New Zealand’s approach stands out as extraordinarily generous to capital owners across the board.

Cheered on by corporate lobbyists and business elites

If ordinary Kiwi workers greeted Budget 2025 with dismay at cuts to their KiwiSaver or social support, the business elite and corporate lobbyists positively beamed at the new Investment Boost’s tax subsidy. Predictably, those representing corporate interests have showered praise on the policy.

BusinessNZ Chief Executive Katherine Rich, voice of the big-business lobby, applauded the “significant and forward-looking move”, saying it “will incentivise capital upgrades and improve competitiveness” – see Jenée Tibshraeny’s Government opted for accelerating depreciation over cutting the corporate tax rate (paywalled)

Rich – a former National MP herself – was given prominent airtime to gush about how “credible and growth-oriented” this Budget was. On RNZ she hailed the Investment Boost as “awesome” for businesses (an endorsement that underscores just how aligned the Government is with BusinessNZ’s agenda).

Professional lobbyists and consultants with close ties to the government also joined the chorus. Holly Bennett, a well-known corporate lobbyist and former National adviser, wrote for the Spinoff that Investment Boost was a “flagship” policy and a “welcome signal” of the Government using policy levers to drive change rather than just spending – see: The great Spinoff hot-take roundtable. In this, Bennett singled out the 20% immediate deduction as a highlight, celebrating that ministers are “actively considering how better policy, rather than more money, can make enduring change.” From a lobbyist’s perspective, it’s the perfect policy – structural support for business interests, sold as a clever reform rather than a costly handout.

Likewise, Brigitte Morten, a political commentator (and another former National staffer now lobbying for the private sector), endorsed the accelerated depreciation as “a game changer” for businesses. She acknowledged households won’t celebrate such tax tweaks, but insisted that for the job creators, “new assets can mean higher productivity, stronger growth and higher wages”. Morten’s message was essentially “trust us, helping business will eventually help workers” – a trickle-down refrain that, as we’ll see, many economists find dubious. Nonetheless, her uncritical cheerleading reflects how firmly entrenched the pro-business bias is in Wellington commentary.

It’s telling that not one of these voices expressed concern for the cost or equity of the policy. The likes of Rich, Bennett, and Morten have been effusive, framing Investment Boost as bold, positive, and even “prudent” in the long term. Their enthusiasm is understandable – after all, their clients and allies are the direct beneficiaries of this $6.6b corporate giveaway.

When top-end lobbyists are essentially high-fiving the Government for its tax policy, ordinary citizens might reasonably wonder whose interests are really being served. The business community’s excitement about Investment Boost is perhaps the biggest red flag of all: those who stand to gain the most are delighted, while the public will bear the costs and risks.

Lobbying, favours and conflicts behind the scenes

The genesis of Investment Boost did not occur in a vacuum. Behind the scenes there has clearly been lobbying and influence-peddling to shape this policy’s remarkably generous contours. Various industry groups and advisors had the ear of the Government as it cobbled together its “growth Budget.”

For instance, Infrastructure New Zealand – representing construction and development firms – has long clamoured for greater tax incentives for building and infrastructure investment. It’s no surprise, then, that commercial property ended up on the eligible list, despite international norms to the contrary.

Similarly, big accounting and consulting firms were keen on some form of accelerated depreciation. For example, Newsroom reported that BDO tax partner Iain Craig was in the pre-Budget lockup and hailed the 20% deduction initiative as “a bold move… with no upper limit on expenditure which could give businesses the confidence to invest in new assets of varying scale.” In other words, exactly what BDO and its clients wanted – an uncapped incentive, even for large-scale projects.

Unsurprisingly, the commercial property sector has been particularly enthusiastic. BusinessDesk has reported, for example, that Scott McKenzie, chief executive of PMG Funds, a commercial property investment firm, noted the policy is “naturally positive for commercial property owners” and will incentivise developers to “build quality space”. However, others have pointed out the possibilities that developers will pocket the subsidy and this might just fuel speculative investment rather than fostering business productivity.

Software company Xero, which serves hundreds of thousands of small businesses, also implicitly stood to benefit from any policy that encourages firms to upgrade equipment (and thus perhaps their software and systems). It and other tech-industry advocates have nudged government for years to adopt investment-friendly tax settings. They got their wish, as the policy applies “to any businesses of any size without cap”, something even Baucher noted with surprise.

The Government could have limited the incentive to small or medium enterprises, or capped the deduction to focus on modest investments that genuinely need a boost, but it did not. One has to wonder if the broad, no-holds-barred design was influenced by corporate players who didn’t want their larger investments left out.

Then there’s Shane Jones and the natural resource sector. Jones, as Minister for Regional Development (and self-styled “Champion of the Provinces”), was instrumental in ensuring extractive industries were lavishly included. It’s worth remembering that NZ First has a history of receiving support from fishing, forestry, and oil & gas interests, and Jones himself has been linked to advocacy for mining and energy projects.

Observers note that the petroleum asset inclusion reads like a direct response to lobbying from that sector – lobbying possibly channelled through Jones and his party. The conflict of interest involving Willis’s father and the petroleum industry only heightens the sense that insider influence played a role in policy formation. This isn’t transparent, consultative policymaking – it’s handshake deals behind closed doors.

Even within National, there were likely internal champions for an aggressive business tax cut. Associate Finance Minister Chris Bishop, who signed off the oil & gas provision, has close ties to the business community and was formerly a lobbyist himself. We also know Inland Revenue and Treasury were under pressure to devise something dramatic to “boost growth.” They obliged by presenting partial expensing as the most cost-effective option compared to, say, a corporate tax rate cut. But crucially, this advice was delivered without external consultation – no select committee hearings, no public submissions. The policy was shoved through under Budget urgency.

As Green MP Lawrence Xu-nan lamented in the House, “we didn’t hear from the people of Aotearoa” on this measure, only three government departments were consulted. That is a far cry from robust democratic process. It suggests ministers wanted to avoid scrutiny and get the deal done swiftly – perhaps to repay promises made to certain supporters or donors before anyone could kick up a fuss.

The convergence of eager lobbyists, friendly ministers, and a rushed legislative process is a classic recipe for policy capture. When a government skips the usual checks and balances, one has to ask: who benefits? Here the answer is clear – private businesses, especially large capital-intensive ones, benefit enormously. And those who had the opportunity to whisper in the Government’s ear early (like industry groups and political allies) shaped a scheme absurdly tilted in their favour. Ordinary citizens, independent experts, unions, and civil society – their voices were shut out of the decision. Little wonder the result is a policy that gushes money toward the already wealthy and powerful.

More generous than the world – and riskier

It’s worth contrasting New Zealand’s Investment Boost with how other countries implement similar ideas. Accelerated depreciation or “bonus depreciation” is not new – many OECD countries have used it, especially in recessions, to stimulate investment. But New Zealand’s version is an outlier in its generosity and lack of targeting.

For example, the United States in recent years allowed depreciation for plant and equipment, but that excluded structures like buildings, was time-limited (phasing down over a few years), and is now expiring. Australia introduced temporary full expensing during Covid, but again with strict time limits and with an end date, and it too generally didn’t apply to buildings in the same way. Other countries often cap the total claim or restrict it to SMEs (small and medium enterprises) to prevent exactly the kind of open-ended cost blowouts that worry experts here. For more on this, see Marc Daalder’s Investment Boost: Govt’s ticking fiscal time bomb

New Zealand has effectively opened the floodgates without even a speed bump in place. John Cuthbertson warns that having “no cap on the value of investments” eligible could “lead to a blowout” in the fiscal cost. This warning isn’t coming from a political partisan, but from one of the country’s top tax professionals, whose job is usually to help businesses take advantage of tax rules. Even he is saying ‘this might be too much of a good thing.’ The Treasury’s own Budget documents list Investment Boost as a “specific fiscal risk,” noting great uncertainty in the cost estimates. In plainer terms, the bean counters aren’t sure how big the hole in the revenue bucket will get – only that it could be very large if businesses stampede to claim this generous deduction.

In theory, the Government could revisit and cap the scheme if it “runs out” of the budgeted allowance, but doing so would be messy and likely require reneging on promises mid-stream. (One can imagine the backlash if, after a year of extravagant uptake by big firms, the Government suddenly tried to claw back or limit claims – the business lobby would howl, and legal challenges might ensue.)

The far wiser approach would have been to include limits from the start, as most countries do, to protect the public purse. Instead, we have Finance Minister Willis breezily assuming that if the scheme really explodes, she’ll somehow deal with it later. That kind of “winging it” approach to $6+ billion in tax revenue is astounding. It also raises suspicions: was the lack of limits a deliberate feature to satisfy certain influential players who wanted the whole hog? It’s hard not to be cynical when no one in Government has offered a solid rationale for why a cap or tighter targeting was omitted. The only obvious reason is that those who lobbied for the policy didn’t want any limits – and they got their wish.

As a result, New Zealand’s accelerated depreciation scheme stands as one of the most permissive in the world. It’s “broad-based” in the extreme, to the point of indiscriminateness. Even some who support investment incentives have voiced caution. Peter Vial of CAANZ, while applauding the move to stimulate investment, diplomatically noted “the Government could have achieved the same goal with a narrower scope of assets… a more targeted approach, focused on the most productive assets.”

In other words, Investment Boost is overkill – it throws money at every asset under the sun, whether or not it truly drives productivity or needs assistance. Tax consultant Geof Nightingale similarly expected a narrower policy and suggested targeting by asset type or sector could keep a lid on costs. These prudent voices were ignored. Instead, what we have is unprecedented largesse toward capital, justified by optimistic Treasury projections that, even in the best case, GDP might be 1% higher in 20 years because of this, and wages 1.5% higher.

A one-off 1% GDP bump spread over two decades (for a $6.6b cost) is a poor return on investment by any measure. This is a mere ~0.05% boost per year according to financial commentator Nick Stewart – see: Budget 2025: King Canute’s economic delusion. If those are the rosiest estimates, the actual payoff could be far more underwhelming, especially once we account for potential rorts or simply subsidising investments that would have happened anyway. New Zealand is essentially betting billions on a trickle of growth while handing big business a golden windfall up front.

Former Council of Trade Unions economist Bill Rosenberg, in a LinkedIn comment, argued that the universalistic approach of the Investment Boost “assists monopolists like supermarket chains, the big incumbent electricity generators and banks, all of which need no financial help to invest. It will go straight to their bottom lines via investments they would have done anyway”. This suggests the policy is not primarily an incentive for new, additional economic activity but rather a reward for existing or already planned activity by large, profitable firms.

If true, this makes it an inefficient use of taxpayer money if the goal is genuine economic stimulus. Matthew Prichard of KPMG reinforces this, observing that the policy will primarily benefit larger businesses. According to reporting by BusinessDesk’s Dileepa Fonseka, Prichard believes that “the change would benefit larger businesses with money to spend on such assets, but smaller businesses without such capital investments on the cards wouldn’t benefit” – see: ‘Everything comes at a cost’: Business leaders on Budget trade-offs (paywalled)

Paid for on the backs of workers and public services

Perhaps the bitterest aspect of this policy is what had to be sacrificed to fund it. Despite Government spin that the Budget was “fiscally neutral” or disciplined, the truth is that huge cutbacks and reprioritisations were made – largely affecting ordinary New Zealanders – to pay for this corporate tax break. The Budget’s largest “saving” was achieved by slashing previously promised pay equity payments for workers in female-dominated sectors like health and education.

Other austerity measures similarly reveal the Budget’s warped priorities. The Government cut the annual KiwiSaver contribution (the “Member Tax Credit”) for higher earners, and even floated removing it entirely based on official advice. They are increasing the KiwiSaver default contribution rates, which effectively forces workers to pay more of their own wages into savings (a long-term good, perhaps, but a short-term pinch on take-home pay). They means-tested the Best Start payment (a support for families with newborns), and generally squeezed social spending wherever they could. Welfare benefits see no significant boost, and public services are told to do more with less.

In sum, the budget aggressively tightened belts for individuals and social programs, citing the need for fiscal restraint – even as it opened the throttle on this generous business tax expenditure. It sends a clear message: when it comes to ordinary people’s needs, money is tight; when it comes to handouts for business, money is no object.

This “wealth over work” Budget stands in jarring contrast to its rhetoric of growth benefiting everyone. We are told that making businesses richer will eventually lead to higher wages or better jobs. Yet the Government’s own documents cast doubt on that. Inland Revenue’s analysis noted “international evidence provides mixed results on how the benefits of investment-targeted tax measures are shared between workers and capital owners,” diplomatically saying it’s “difficult to assess” who wins.

Therefore there’s little guarantee workers will see a cent of this boon. Executives and shareholders can just as easily pocket the tax savings or invest in automation that replaces jobs rather than creates them. Bill Rosenberg has long argued that un-targeted business subsidies tend to inflate profits and executive bonuses more than they do wages – exacerbating inequality. The Government insists higher productivity will lead to pay rises, but that faith is not backed by evidence or recent history.

So we have to ask: Why is a Government that preaches tight fiscal management willing to splurge billions on an uncapped corporate tax break? The uncomfortable answer is ideology and influence. This is a Government firmly aligned with vested interests – with capital over labour, wealth over work. The painful cuts to social spending and worker entitlements in this Budget make sense only when you see what they funded: a huge gift to business, which was clearly the political priority.

The bias is explicit. At a time of constrained resources, choices must be made – and the Government chose to lavish generosity on those with capital to invest, while telling those relying on public services, pay equity, or welfare to tighten their belts. It’s a textbook case of regressive redistribution.

Integrity and democracy under question

The Investment Boost looks very much like horse trading: the kind of deal where political donations and industry lobbying might have greased the wheels. While we do not have evidence of a quid pro quo in the legal sense (no brown envelopes caught on camera), the outcome aligns so perfectly with what wealthy donors and industry groups wanted that it inevitably raises suspicions.

The National Party and its coalition partner have deep ties to business circles – it doesn’t take a conspiracy theorist to wonder if this policy was a way of rewarding those backers. When policies so clearly favour a narrow constituency (capital-intensive corporations) at the expense of the broader public interest, people start questioning the integrity of the political system. Is this for the public good, or for the National Party’s campaign fund? Is it about economic strategy, or paying back mates?

Even if one gives the Government the benefit of the doubt on motives, the optics are terrible. The enthusiastic public endorsements from lobbyists like Holly Bennett and industry chiefs like Katherine Rich make it look like the Government is captured by corporate interests. The conflict of interest with Willis’s family and the oil industry makes it look like personal connections can influence policy (even if indirectly). And the disproportionate impact – benefiting big capital while ordinary people face austerity – makes it look like our democracy is tilted in favour of the rich and powerful. These perceptions corrode public faith in government. New Zealand used to pride itself on relatively clean, consensus-driven governance, but moves like this further undermine that reputation.

In the final analysis, Investment Boost may indeed boost investment, but at what cost to fairness and integrity? The Government has chosen to prioritise wealth over work, capital over labour, donors and lobbyists over citizens. The 2025 Budget sends a loud message about who gets listened to in the halls of power. Businesses wanted a big tax break and got it; workers and vulnerable groups asked for support and were told to wait. This column is called Integrity Briefing for a reason – because budgets are not just about dollars, they are about values and honesty in governance. On that score, the Investment Boost policy is deeply troubling. It tilts the playing field further toward those with wealth and access, and it does so via a process that sidestepped the usual democratic safeguards.

New Zealanders deserve growth and prosperity, yes – but prosperity that is broadly shared, and achieved through fair means. By rolling out an uncapped corporate welfare scheme while pinching pennies for everyone else, the Government has revealed its hand. It is betting that helping the big end of town will somehow trickle down to the rest.

History and evidence say otherwise. In the meantime, we are left with the immediate reality of a $6.6b gift to capital and a host of questions: Who really asked for this? Who really benefits? What was promised behind closed doors? And crucially, who will hold power to account for it? In a functioning democracy, policies like this should face rigorous debate and amendment. Instead, Kiwis are left to read the fine print after the fact. The Investment Boost saga is a case study in why eternal vigilance is needed to safeguard the integrity of our public finances and the fairness of our society.

The Government may call it a “Boost,” but for many it looks like a brazen handout to the well-connected – one that boosts our doubts about whom our democracy is really working for.

Dr Bryce Edwards

Director of The Integrity Institute