25-05-2025
Budget 2025: A fiscal ‘time bomb' and a ‘disrespectful' blue dress
As the post-budget sales pitch ramps up, Investment Boost is put under the microscopic – while one fashion headline sparks an unlikely political sideshow, writes Catherine McGregor in today's extract from The Bulletin.
The politics of regional neglect?
The deluge of post-Budget commentary has hardly let up, and for two of New Zealand's largest and most politically sensitive regions – Auckland and the South Island – the reaction has been especially pointed. Business leaders in Auckland are cautiously optimistic, the Sunday Star-Times' Stewart Sowman-Lund reports (paywalled). Former National leader turned Business Chamber CEO Simon Bridges called it 'a real shot in the arm' while mayor Wayne Brown said he welcomed the investment in developing innovation, technology, and science and encouraging foreign investment. Greens' co-leader and Auckland Central MP Chlöe Swarbrick was less enthused. She said the budget would make the city 'demonstrably worse', citing the budget's lack of funding for climate resilience and addressing poverty.
With little in the budget expressly for the South Island, mainlanders are still waiting for the government's words on regional empowerment to become action, independent economist Benje Patterson told The Press's Blayne Slabbert (paywalled). The government is 'continuing to kick the can down the road' on its fiscal promises to the South Island, he said. Patterson also questioned the long-term value of Investment Boost, an untargeted incentive likely to fund a lot of 'tax-efficient ute upgrades'.
A good idea, with a gaping hole
The Investment Boost tax break has emerged as one of the most debated measures of Budget 2025. On paper, it's simple: allow businesses to deduct 20% of new asset costs upfront to incentivise growth. But as Newsroom's Jonathan Milne reports, the scheme contains a potentially explosive flaw: there's no cap on either eligibility or cost. Unlike similar programmes overseas, New Zealand's version doesn't have a narrowly defined set of depreciable assets. Instead, Milne's colleague Marc Daalder writes, it offers 'massive, uncapped tax cuts for billion-dollar oil rigs, fast-tracked coal mines and glittering skyscrapers' – meaning just a few large-scale developments could send the cost spiralling well beyond Treasury's $6.6 billion estimate.
The finance minister has said the policy will deliver the 'confidence injection' business needs – and Daalder agrees. 'It's hard to imagine a policy that could inject more confidence for the big end of town than an uncapped opportunity for everyone from multinationals to commercial property developers and [Shane] Jones' beloved mining sector.'
Labour's fiscal headache
While National and its partners defend the budget's restraint, Labour finds itself facing a challenge of a different kind: how to mount a credible alternative. As Thomas Coughlan writes in the Herald (paywalled), Labour's fiscal strategy appears muddled, with no clear consensus on spending, debt or taxation. The issue of pay equity funding illustrates the problem: Labour has criticised the government's decision to scrap the $13 billion contingency, but offered no roadmap to restore it.
As Coughlan observes, if Labour plans to reinstate pay equity, it needs to explain how – especially when even its 2023 wealth tax wouldn't fully cover the cost. 'Who'd have thought that after a Budget as stern and severe as this, one that leaves so many victims, so many targets, that it might actually be Labour that comes off in the more vulnerable political position?'
Chris Bishop to the Herald: 'be better'
Among all the talk of budget winners and losers, one story has spiralled well beyond policy: Nicola Willis' dress. It all started when the Herald interviewed a local designer who said the finance minister's choice to wear a British label on Budget Day showed 'total disrespect' to the local fashion industry.
The story attracted swift backlash, including from fellow National ministers. Chris Bishop called it 'sexist' and noted no one asked what he or other male MPs were wearing. Tying the article to Andrea Vance's controversial pay equity column, Bishop said 'we don't need gendered abuse of MPs by journalists like Stuff dished out two weeks ago, and we don't need articles commenting on what female MPs wear on Budget Day.' Willis herself dismissed the criticism, saying she wore a mix of overseas and local fashion brands and the media's focus should be on policy, not clothing.
