Investment boost seen as a step in the right direction
Investment Boost, a new tax incentive focused on encouraging businesses' capital investment, was among the announcements made by the government yesterday as part of Budget 2025.
It would allow businesses to deduct 20% of the value of new productive assets, such as machinery, tools, equipment, vehicles and technology, from that year's taxable income, on top of normal depreciation.
"There's no cap on the value of eligible investments," Finance Minister Nicola Willis said in a statement yesterday.
"All businesses, regardless of size, can benefit."
The deduction applies to new assets purchased in New Zealand from yesterday, as well as new and used assets imported from overseas.
It included commercial buildings but excluded land, residential buildings and assets already in use in New Zealand, Ms Willis said.
Advancing Manufacturing Aotearoa board chairwoman Sarah Ramsay said a policy on accelerated depreciation had been its "number one ask" to the government.
"So I think it's fantastic that they've made a start on it.
"I think there's still more to go ... but I think it's a great step in the right direction."
More advanced and productive assets had "a much higher price ticket", and the incentive could be the difference between replacing existing assets and investing in more advanced pieces of equipment, she said.
"So I certainly think it will factor into decisions around do we buy and replace an asset with like-for-like, or do we actually look at taking a more innovative step because it has been de-risked to a certain extent with that accelerated depreciation."
Purchasing new assets could also be challenging due to high commissioning costs and other costs associated with training and onboarding.
"It certainly gives companies a bit more air to be able to execute that properly."
Mrs Ramsay, who is also the chief executive of United Machinists, said most of the company's machinery purchases were valued at between $500,000 to $1.2million.
The company had just commissioned three new pieces of equipment and was looking at investing about another $1.5m over the next year into two new pieces of equipment.
Investment Boost would "certainly help" with the company's capital planning and business case, and could even bring some investments forward, she said.
Farra Engineering manager director Gareth Evans said the incentive was "definitely a great move" but did not think it would have the impact the government perhaps hoped it would on capital investment in the manufacturing sector.
"I think anything that supports capital investment is good.
"I'd like to see it augmented with concessionary loans, which would, I think, be much more stimulative in terms of private business capital investment.
"But this is a great first step and it's very positive to see."
While he did not believe it would affect the company's investment decisions, it could have a material impact for a lot of other businesses.
Companies with established revenue streams might stand to benefit rather than any particular specialised field of manufacturing, Mr Evans said.
"It's good for established businesses like ours, but for earlier stage businesses where possibly they're not at profitability yet, it doesn't give them the same advantage."
While the incentive would have "zero impact" on the company's capital investment plan, it could be a factor for the plans of a select number of other businesses, he said.
"I don't think it will drive a fundamental change in behaviour, whereas access to better interest rates or other mechanisms would have a huge impact.
"Personally, I don't see it having more than a fairly small percentage uplift in capital investment across the sector."
tim.scott@odt.co.nz
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NZ Herald
8 hours ago
- NZ Herald
What will private schools be spending extra Budget money on? David Seymour says he's ‘open' to giving more funding
The multi-million dollar funding boost, announced in Budget 2025, is being driven by Associate Minister of Education David Seymour. He says the amount of money private schools receive has been shrinking, with the last increase to the subsidy coming in 2010. The list of schools receiving the increased subsidy for 2026 will be made available next month by the Ministry of Education. Seymour also says he's 'open' to the idea of the pot growing even more and explains that children at private schools receive around one-tenth of the funding of public-school students. 'Is that fair? Their parents are taxpayers, they're New Zealand citizens, they're entitled to an education. I think in a fair world, that would be higher,' Seymour told the Weekend Herald. St Cuthbert's College principal Charlotte Avery began working at the school in 2024 after moving to New Zealand from England. With a roll of 1650 students, St Cuthbert's College is set to receive an estimated $1.6 million subsidy from the Government. The amount has increased by $160,000 on the previous per-student rate. Principal Charlotte Avery, who took on the leader's role at St Cuthbert's last year after shifting from a prestigious private girls' school in Cambridge, England, says in real terms the subsidy isn't a large payment at a $100 increase per student. 'We are grateful of course for that recognition, but in the end it's a very small part of supplementing our fee income,' Avery says. 'We recognise that we are a school of privilege – privilege is not a dirty word but it is important in terms of recognising responsibility.' Prime Minister Christopher Luxon (left) and Associate Education Minister David Seymour, who says families are often making big sacrifices to pay independent school fees. Photo / Mark Mitchell At co-educational private school Scots College in Wellington, headmaster Graeme Yule says the funding increase is 'well overdue'. He also argues it shouldn't become an ideological debate. 'It's much, much easier to cry elitism and to cry inequality but the facts don't match that, the finances are different,' Yule says. 'There will always be a perception in this that the Government's robbing the poor state schools and giving the money to the rich independent schools ... but we receive around $40 million in government subsidy and we pay GST on fees to the Government of around $150 million.' That tax on fees, Yule says, can be invested back into the state sector to support public school students. Public versus private school funding Post Primary Teachers' Association (PPTA) president Chris Abercrombie, however, sees another reason for the Government making this decision. 'Well, David Seymour's [Epsom] electorate has a lot of private schools in it,' Abercrombie says. In Abercrombie's view, the Government's focus should be firmly on supporting the public education system, and if parents choose to send their child to a private school then the state shouldn't subsidise that decision. 'We don't support private schools getting any subsidy at all, let alone an increased subsidy,' he says. A view of St Cuthbert's College in central Auckland. The private school is one of New Zealand's best-performing for academic results. Photo / NZME Figures provided by the Ministry of Education reveal the subsidy for Years 1-6 at private schools will be rising to $1016 per student – a 20% increase. That amount has increased by $167 per student. Older students from Years 11-13 will receive $1918 per student - an increase of just 6%. Subsidy rates will not be recalculated each year but will be treated like other state school resourcing, with adjustments made for the number of students on private school rolls. But Seymour says his decision hasn't been influenced by private schools in his electorate, one of the country's wealthiest, and the PPTA is 'just flinging mud'. In comparison, figures given to the Herald by Seymour's office reveal the amount for Years 1-6 at state schools is $7648 per student annually, while the funding for secondary schools in the state system is $9853 per student. Funding cuts to public schools At a small Porirua school nestled in native bush on the edge of Cannons Creek, principal Lynda Knight says she has been facing a list of government funding reductions during the last six months. The school's funding has been cut for its Reading Recovery programme, Pasifika Early Literacy Project and the Pacific Education Innovation Fund. Funding has also been cut to Regionally Allocated Professional Learning and Development and te reo Māori training for teachers, so the school can no longer acquire these supports. And there is no longer access to Resource Teachers of Literacy and Māori. They have also lost a whānau liaison support worker role that was funded by Oranga Tamariki. Knight says the school, with just 110 primary-age students, can't hold big parent and community fundraisers as some affluent areas can, and any fundraising initiatives only bring in small amounts of money. 'I think we're increasing that disparity if we're increasing the funding [for private schools]; we must be decreasing the amount of money for public schools like mine,' she says. Abercrombie says disparities between public and private schools are creating a growing divide between the 'haves and have-nots'. Differences in the resources available to schools are exacerbating inequity across the education system, he says. 'State schools are facing that same cost pressure, their power's gone up and the price of toilet paper – they're hurting as well. But they don't have the ability to just increase their fees and tap into other sources of income that private schools do.' What the money will be used for? In Wellington, Yule says the private school subsidy is going to be used to keep fees as low as possible at Scots College and increase accessibility for the school. It will also go towards running costs. Dilworth School in central Auckland is receiving the subsidy but because of its unique position with every student funded fully through a scholarship, the funds will be used elsewhere. Dilworth School in Epsom, Auckland provides full scholarships to its students. Photo / Dean Purcell The money at the boys' boarding school, headmaster Dan Reddiex says, will instead go towards offsetting the cost of food for students, investing in teachers, driving academic results and funding extracurricular activities such as sending their premier choir Fortissimo to the Big Sing Finale in Dunedin. The school's whānau community is not typically in a position to fully fund school trips, he says. 'We provide seven meals a day for our students and inflation has hit hard in this area.' Meanwhile, Avery says the subsidy will support a range of ongoing projects at St Cuthbert's College. These include enhancing its suite of facilities, improving flood resistance in the school's buildings and paying teachers and staff members' salaries. It will also contribute to improving its outdoor campus – Kahunui – in the Bay of Plenty, a place where Year 10 students travel to attend a month-long school camp that embraces off-the-grid learning. At Knight's school in Porirua, Year 6 students used to travel to El Rancho in Waikanae – 45 minutes up the road – for a two-night camp. However, now that community funding is unavailable, the future of camps for their senior students is uncertain. In a community where family holidays are a rarity, Knight says pupils leaving often comment that school camp is their favourite memory from school. Growing waitlists for private schools As Auckland grows, St Cuthbert's College has been experiencing higher demand for places on its school roll and has waiting lists for prospective students. Scots College has also been facing similar pressure, with headmaster Yule noticing parents are being propelled to private schools by their feeling of unease in the current state system. 'The issues with literacy and numeracy, open-plan classes and the dissatisfaction with NCEA and so forth, I think, have driven a number of people towards considering independent schooling.' At Dilworth, Reddiex says demand for places has also increased significantly within the past two years, with scholarship places being highly competitive. Avery says the subsidy is a recognition of the role independent schools play in educating a percentage of the Kiwi population, which takes the financial pressure off the rest of the education system. Similarly, Seymour says private school students suddenly flooding into the state sector would create an enormous cost for the Government. 'This whole debate to me says something about where we are and where we could be as a country. What you've got is a small group – about 4% of children and their parents and grandparents – often making big sacrifices to pay independent school fees because in their view, that's a better future for them,' he says. 'Rather kind of sneering, resentful tone, we should say, 'okay, that's a choice people make', I may or may not make it for myself, but we should be happy for other people. 'Those people are actually saving the taxpayer a lot of money.' In Porirua, Knight believes the $160,000 increase St Cuthbert's College is receiving could make 'a world of difference' at her small school. She says the money would go towards funding two more teachers or more teacher aide support. Eva de Jong is a New Zealand Herald reporter covering general news for the daily newspaper, Weekend Herald and Herald on Sunday. She was previously a multimedia journalist for the Whanganui Chronicle, covering health stories and general news. Sign up to The Daily H, a free newsletter curated by our editors and delivered straight to your inbox every weekday.
NZ Herald
a day ago
- NZ Herald
Foreign buyers ban: Nicola Willis says decision on investors purchasing property in New Zealand coming within weeks
In an interview with Bloomberg today during a trip to New York, Willis was asked whether foreigners could purchase real estate in New Zealand. 'Not currently. That is excluded. Our Government, which is comprised of three parties, has been in discussion about loosening those regulations so those who get an Active Investor Visa may in future be able to purchase a property in New Zealand. 'Those talks have been under way and you would expect that a decision would be made by our Cabinet in the coming weeks.' Willis said New Zealand was 'surrounded by a big, fat ocean' and 'we have huge amounts of land'. 'It is beautiful. I think the world should be looking at New Zealand. We have great prospects.' Finance Minister Nicola Willis, who's currently in the United States, says a decision is coming within weeks. Photo / Mark Mitchell The minister said the Active Investor Plus Visa was 'working' and the Government had been 'delighted by the response'. 'Hundreds of people have applied for those visas within the first few months, pledging over $1 billion in New Zealand funds.' She said New Zealand is a 'safe, secure place in a world that increasingly is less so' and people 'like the idea of having that residency in New Zealand'. 'They can see that many of our investment opportunities are currently under-capitalised. Investing in New Zealand is a good bet.' The Government made changes to the Active Investor Plus Visa earlier this year, introducing two categories in which foreigners can invest. This provides a pathway to residency for investors after keeping their funds invested for a particular period of time. The Growth category requires a minimum of $5 million in either direct investments or managed funds for three years, while the Balanced category requires at least $10 million across a variety of options like bonds, new property developments, and philanthropy for five years. As of August 8, 267 applications had been received under the new settings for 862 applicants. Most of these were in the Growth category. Of the applications received, 164 have been approved in principle. Thirty-two applicants have been granted residence visas. The applications amount to a potential total minimum investment of more than $1.6 billion. So far the total committed investment is about $200 million, with the majority going into managed funds and bonds. NZ First leader Winston Peters denies his party is softening its approach. Photo / Mark Mitchell Last month, in an interview with the Herald, Peters denied NZ First was softening its approach to the current foreign buyers ban, but said the Government was considering settings to allow some investors to purchase property here. However, he maintained that foreigners not contributing to the economy, should not be able to purchase property. Peters also remained critical of previous National policy to tax foreigners purchasing property valued at more than $2 million. 'The idea that for $2 million you could come into this country and get a key and that's your investment was a nonsense,' Peters said. 'We said so before the election. We also debunked the costings for it, and were joined not long after that by economists who said that New Zealand First was right.' He said that if someone was putting $15 million into New Zealand, they should be able to buy a house, but 'not a $2m house'. Immigration Minister Erica Stanford has previously expressed a desire for those with an Active Investor Plus Visa to be able to purchase land here. 'They want to be able to have a base here, they want to invite their friends here and show off their home and raise their children here and, yes, that is a barrier. That is why those conversations are being had at the moment,' she told Q+A earlier this year. Seymour told the Herald in July that if NZ First changed its historical position, 'there wouldn't be any complaints from me'. 'I'd be there with bells on, because I think allowing our friends around the world to come to our country, bring their money, and live here is generally – and there are exceptions – but generally, a win-win for New Zealand.' The foreign buyers ban was introduced in 2018 when Labour was in a coalition with NZ First. Classifying residential housing as 'sensitive' in the legislation meant non-residents and non-citizens couldn't purchase existing residential homes. Rumours have swirled for months that the Government is eyeing changes to the ban, with Peters suggesting on several occasions that he is open to considering an adjustment. Jamie Ensor is a political reporter in the NZ Herald press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. In 2025, he was a finalist for Political Journalist of the Year at the Voyager Media Awards.
NZ Herald
3 days ago
- NZ Herald
ASB profit dips as staffing rises, $33m set aside for customer compensation
She said the increase in staffing levels wasn't a one-off that would be unwound as projects were completed. Rather, the investment was a 'continuation of a theme you've seen with ASB over the years'. ASB's expansion comes as the Australian Financial Review reports Westpac Group made 790 staff redundant in the past two months, and ANZ's new group chief executive talking up the need for a slimming of the company and more efficient ways of working. Neither Westpac nor ANZ would tell the Herald whether jobs would be cut in New Zealand. 'Westpac NZ operates as a separate entity to Westpac's Australian operations with a unique culture that supports our New Zealand customers and employees, however we welcome their focus on change and transformation,' a Westpac spokesman said. 'We continually review how we operate, and the composition of our workforce changes periodically as we adapt to meet customer demand and business requirements. 'We'll be able to provide a full view of any movements up or down at our full-year results in November.' Coming back to ASB, the other expense it flagged was A$33m ($36.18m) in customer 'remediation provisions'. Shortt declined to elaborate on why the bank had put money aside to potentially reimburse customers for a mistake, or various mistakes, the bank has made. She said it was standard practice for the bank to notify regulators if it believed there was a breach, before looking to rectify the issue and pay out customers. An A$33m payout to customers would be material for ASB. Shortt clarified this provision was unrelated to the class action, currently before the courts, taken against ASB and ANZ for disclosure breaches dating back to the mid-2010s. ASB increased its mortgage lending by 7% and its business and rural lending by 2% in the year to June. The value of its interest-bearing customer deposits also rose by 3%. ASB's net interest margin inched up by 4 basis points to 2.27%, as it increased margins on its home lending. Shortt said ASB customers hadn't shifted their money around since the Reserve Bank-administered Depositor Compensation Scheme became operative on July 1. The scheme ensures up to $100,000 per depositor, per institution is guaranteed. This means that if someone had $200,000 of savings at a bank that collapsed, they would get $100,000 under the scheme. Shortt said the Government hadn't consulted with ASB on the possible introduction of a new bank tax or levy, further to Finance Minister Nicola Willis seeking advice from government officials on this. Jenée Tibshraeny is the Herald's Wellington Business Editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.
