Source: New Zealand Government
The Government’s Investment Boost is already changing investment behaviour, bringing projects forward, increasing scale, and lifting productivity across the economy, Minister for Economic Growth Nicola Willis says.
New Inland Revenue survey data shows the policy is working, tipping investment decisions early, increasing scale, and bringing capital forward.
“Among firms that invested in new assets and were aware of Investment Boost, 40 per cent say it increased their investment spending over the past year, including 11 per cent reporting a significant increase directly because of the policy,” Nicola Willis says.
“Looking ahead, the impact is even clearer. Nearly half of firms planning to invest over the next five years say Investment Boost is positively influencing those plans, with 14 per cent expecting a large increase in investment as a result.
More than half of firms surveyed report changing the timing, scale or type of investment they are making, including bringing projects forward and shifting toward productivity-enhancing assets.
“Inland Revenue modelling shows the policy reduces the effective marginal tax rate on new capital investment by around five to six percentage points on average, making previously marginal projects viable and encouraging more investment to proceed.”
This data underlines the importance of policy certainty to long-term growth.
“When it was launched, Inland Revenue estimated that Investment Boost would lift New Zealand’s GDP by 1 per cent, wages by 1.5 per cent and capital stock by 1.6 per cent over the next 20 years, with around half of those gains expected in the first five years – todays data shows we are well on track to reaching those marks.
“The Government has been clear it backs ownership, investment and stable productivity-enhancing tax policy.
“New Zealand does not grow by taxing more and investing less. It grows by backing ambition, rewarding success, and giving businesses the confidence to invest for the long term.”
Notes to editors:
Investment Boost changes are already visible on the ground:
- A Dunedin manufacturer, United Machinists, has brought forward investment in robotics and automation rather than phasing it over several years;
- Foot Science International in Christchurch has accelerated investment in automation and renewable energy infrastructure, while;
- Vynco is investing in advanced manufacturing equipment to lift efficiency and expand capacity.