Investment Boost Driving Surge in Business Spending and Productivity

Minister for Economic Growth Nicola Willis said the latest survey results confirm the tax incentive is working as intended — encouraging firms to bring forward capital investment and back growth.

New Inland Revenue data shows the Government’s Investment Boost policy is already reshaping business investment decisions, accelerating projects, expanding scale, and lifting productivity across the economy.

Minister for Economic Growth Nicola Willis said the latest survey results confirm the tax incentive is working as intended — encouraging firms to bring forward capital investment and back growth.

“The Government’s Investment Boost is already changing investment behaviour, bringing projects forward, increasing scale, and lifting productivity across the economy,” Ms Willis said.

40% of Firms Increased Investment

Among firms that invested in new assets and were aware of the policy:

• 40% say Investment Boost increased their spending over the past year

• 11% report a significant increase directly because of the policy

Looking ahead, the impact appears even stronger:

• Nearly 50% of firms planning investment over the next five years say the policy is positively influencing their plans

• 14% expect a large increase in investment as a result

“Looking ahead, the impact is even clearer,” Ms Willis said.

Projects Brought Forward, Scale Expanded

More than half of firms surveyed reported changing the timing, scale, or type of investments they are making.

This includes:

• Bringing projects forward

• Increasing project scale

• Shifting toward productivity-enhancing assets

The findings suggest businesses are responding not just by investing more, but by investing smarter.

Tax Settings Making Marginal Projects Viable

According to Inland Revenue modelling, Investment Boost reduces the effective marginal tax rate on new capital investment by around five to six percentage points on average.

That shift:

• Makes previously marginal projects commercially viable

• Encourages more capital deployment

• Strengthens long-term productivity growth

The policy’s design focuses on lowering the cost of capital while maintaining fiscal responsibility.

Long-Term Growth Forecasts on Track

When launched, Inland Revenue estimated the policy would, over 20 years:

• Lift GDP by 1%

• Increase wages by 1.5%

• Expand capital stock by 1.6%

Around half of those gains were projected to occur within the first five years.

“Today’s data shows we are well on track to reaching those marks,” Ms Willis said.

Certainty Key to Business Confidence

The Minister said the survey underscores the importance of stable, predictable policy settings for long-term economic growth.

“The Government has been clear it backs ownership, investment, and stable productivity-enhancing tax policy,” she said.

“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.”

A Productivity-Focused Growth Strategy

The Government argues that Investment Boost is central to its broader strategy of lifting productivity, strengthening capital investment, and positioning New Zealand for sustained economic expansion.

With businesses already adjusting behaviour in response, officials say the early data signals momentum building across multiple sectors of the economy.