Pitched as a growth engine — a tax break to get businesses buying machines, tools and buildings, lifting productivity and wages.

The Policy: National Investment Boost Policy — 2023 Election →

What it does:

• The break: from 22 May 2025 a business can immediately deduct 20% of the cost of a new asset, then depreciate the remaining 80% as normal (IRD).
• Eligible: new plant, machinery, commercial and industrial buildings and improvements, and second-hand assets new to NZ; land and residential buildings are excluded.
• Scale: Treasury budgeted about $1.67 billion a year and estimated it would lift GDP by ~1% and wages by ~1.5% over 20 years.

The bigger story — can it make NZ competitive?

• The argument: NZ manufacturing has long under-invested in capital and automation, which drags productivity; and the cost gap with China and India is mostly about scale (small firms, insular markets) and labour costs, not inherent inefficiency. Subsidising new equipment and automation is exactly the lever that can help "level the playing field" on cost and support more local, resilient production — a case made since COVID (MBIE, Stuff). And the overseas cost advantage is not fixed — as Chinese wages rise, that edge is already shifting to Vietnam and Indonesia.
• Early uptake: the rural sector is a clear first beneficiary — farmers, growers and processors can write off 20% of new machinery; the Tractors and Farm Machinery Association called it "the carrot" after new tractor sales fell 18% in 2024 and machinery prices rose about 30% over five years (NZ Herald). Business groups broadly welcomed it (The Post).
• The caveat: it is a broad, untargeted deduction — it rewards all asset buying, not manufacturing or automation specifically — so whether it genuinely shifts NZ toward competitive local production, rather than subsidising purchases firms would have made anyway, is unproven; small scale remains the deeper constraint.

The result:

It is law and in force from Budget day 2025 — a kept promise. Tax advisers were cautiously positive (KPMG framed it as a game-changer or a white elephant depending on uptake), while critics flagged that IRD ran no consultation on the design and that the uncapped cost could blow out (Newsroom). Verdict: delivered and business-friendly, a potentially genuine productivity and onshoring nudge — but broad, unproven and fiscally open-ended.