Government Budget 2025 | BDO New Zealand

Welcome to BDO’s Budget 2025 overview

Finance Minister Hon Nicola Willis has delivered Budget 2025.

In her April 29 speech prior to the Budget announcement, Nicola Willis announced a reduction in the size of the operating allowance for Budget 2025 from $2.4bn to $1.3bn, to “reduce the amount of extra borrowing our country needs to do over the next few years” and “keep us on track towards balanced books and debt reduction.” She also said there was room for “modest measures to support business growth and provide some carefully targeted cost of living relief”. Meanwhile, New Zealand’s business leaders are being challenged by economic concerns and business growth, as highlighted in the May 2025 BDO Business Wellbeing Index.

Prime Minister Christopher Luxon acknowledged these concerns today, saying “Budget 2025 is firmly focused on growing the economy to help Kiwis get ahead.”

So, with a restricted operating allowance, what has Budget 2025 delivered to help address growth and other Kiwi business concerns?

Budget commentary sections:

Budget highlights

Going for growth

Budget 2025 has reiterated the Government’s ambition to grow the economy. A major announcement from today’s Budget is the introduction of Investment Boost, a tax incentive for New Zealand businesses to invest in productive assets like machinery, tools and equipment. This is designed to benefit both businesses and the economy, stimulating investment by making investment opportunities more financially viable. Budget 2025 states that more investment brings improved productivity and long-term economic growth - and businesses that invest will receive a tax benefit, giving them more money in the year they purchase a new asset.

Other business growth measures include the pre-Budget announcement of an extra $100 million committed to the Elevate venture capital fund to help companies “grow from small beginnings to create opportunities for other New Zealanders and contribute to the New Zealand economy”.

Budget 2025 sets aside $75 million for tax changes to encourage foreign investment in New Zealand infrastructure and make it easier for startups to attract and retain quality staff. There was also the announcement of a $577 million injection to support film and television production, to “help bring investment, jobs and income to New Zealand, boosting our economic growth”, plus support of the science and innovation reforms announced earlier in 2025.

Sector support

Infrastructure has also been addressed in the Budget, with funding committed for hospitals, classrooms and schools, rail maintenance, prisons, defence and roads. Frontline services including education, healthcare, corrections and police have also been boosted, while social care has also seen dedicated new spending.

Cost of living

There were several major announcements impacting New Zealanders’ finances including changes to KiwiSaver, increasing the default contribution for employees and employers while reducing Government contributions. In addition, cost of living support has been announced through changes to Working for Families and rates rebates for SuperGold Card holders.

A summary of key expenditure areas and policy announcements is outlined in the graphic below.

Key expenditure and policy announcements

	Tax & economy A range of measures to support the Government’s commitment to economic growth	Introduction of Investment Boost, a tax incentive to encourage businesses to invest in productive assets. Find out more about the Investment Boost here. $85m over four years to set up Invest New Zealand to attract global capital, businesses, & talent to New Zealand industries $35m a year for Inland Revenue for tax compliance & collection activities Tax changes to encourage foreign investment & help startups & unlisted companies Changes to KiwiSaver, including reduced Government contributions & increased default contributions
	Cost of living Targeted support to help alleviate cost of living pressures	Increasing Working for Families for 142,000 families Rates rebates for SuperGold Card holders Extending prescriptions to 12 months
	Investing in business New initiatives to support Kiwi businesses	Introduction of Investment Boost to encourage businesses to invest in productive assets $100m for Elevate venture capital fund to boost high growth technology companies $10m to defer tax liability of some employee share schemes to help startups & unlisted companies
	Infrastructure & construction Funding for infrastructure investments to boost growth and provide better public services	$1bn for hospital expansions & upgrades $605m for rail upgrades & renewals >$700m for new and expanded schools $219m to complete recovery works on North Island roads $65m to change New Zealand’s thin capitalisation rules, encouraging foreign investment in infrastructure $50m for upgrades to mental health facilities Redevelopment of Christchurch Men’s Prison, financed through a public-private partnership
	Education New funding to help lift academic achievement	$646m to support children with additional learning needs $140m over four years to boost school attendance $100m over four years for maths help $398m in tertiary education over four years
	Defence & law and order Investments in defence and law and order to keep New Zealanders safe	$2bn to replace navy helicopters $660m to improve Defence Force capabilities across air, sea, land & cyberspace $480m to support frontline police $472m to manage the prison population >$103m to upgrade Youth Justice facilities & address recidivism in young people. $246m to reduce court delays & improve access to justice $35m to keep drugs & organised crime out of the country New high-security beds at Christchurch Men’s Prison
	Health Measures to ensure New Zealanders can access quality and timely healthcare	$1bn for hospital expansions & upgrades $447m for primary and after-hours care $50m for upgrades to mental health facilities Additional aged care funding
	Social policy Funding to support the provision of social services	$774m to improve the redress system & strengthen the care system $760m for Disability Support Services A new $190m Social Investment Fund, part of $275m over four years to Vote Social Investment $14m for Māori Wardens, Pasifika Wardens & Māori Women’s Welfare League A new contestable Flexible Fund, replacing previous housing programmes
	Other Film and media boosts	$577m for the International Screen Production Rebate Scheme $6.4m over four years in council, community & court reporting.

Iain Craig, Tax Partner, highlights the key policy announcements in the Budget in the video below.

“Immediately ahead of Budget 2025, our BDO Business Wellbeing Index showed business growth and economic pressures were leading concerns for our local business leaders. Today’s Budget announcements make a start in helping to alleviate these pressures, particularly the Investment Boost along with other cost of living focused measures. For many business leaders, the future growth and success of their businesses will be driven by factors beyond today’s Budget announcements, including ongoing Government policy settings, improving macroeconomic conditions, and ultimately their own actions to proactively position their businesses for success.”

Kimberley SymonBDO Advisory Partner

Our Budget commentary leads

Iain Craig

Tax Partner

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Alan Scott

Tax Partner

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Welcome to BDO’s Budget 2025 overview

Budget commentary sections:

Budget highlights

Going for growth

Sector support

Cost of living

Key expenditure and policy announcements

Tax & economy

Cost of living

Investing in business

Infrastructure & construction

Education

Defence & law and order

Health

Social policy

Other

Our Budget commentary leads

What are the big issues for businesses?

What are the big issues
for businesses?