Source: Radio New Zealand
Finance Minister Nicola Willis at the New Zealand Economic Forum. RNZ/Libby Kirkby-McLeod
Finance Minister Nicola Willis is challenging Labour to commit to keeping her Investment Boost policy if elected.
The centrepiece of last year’s Budget, the boost, allows businesses to deduct 20 percent of a new asset’s value from taxable income on top of normal depreciation.
When launched in May, it was expected to boost New Zealand’s GDP by 1 percent, wages by 1.5 percent and capital stock by 1.6 percent over the next 20 years.
Willis talked up the policy’s effects so far in a speech to the New Zealand Economic Forum in Hamilton on Thursday.
She said about 40 percent of firms investing in the next five years said the policy had increased their investment spending over the past 12 months, with 29 percent of those reporting a “moderate” increase and another 11 percent a “significant” increase.
The Economic Forum at the University of Waikato. RNZ / Libby Kirkby-McLeod
Looking ahead, 49 percent planning to invest in the next five years were saying Investment Boost was positively influencing their plans, with 14 percent expecting a large investment.
“These are not theoretical ideas. These are real businesses making real decisions earlier, larger, more productively because their incentives have changed.
“That matters because capital deepening is how productivity rises and productivity growth is the only way we will grow wages sustainably over time.”
She said the policy would only work if businesses believed it would endure.
Labour’s finance spokesperson Barbara Edmonds. RNZ / Samuel Rillstone
“Firms do not invest in long-lived capital, plant, machinery and buildings if they think the tax rules may change at the change of an election.”
She called for Labour’s leader Chris Hipkins and his Finance spokesperson Barbara Edmonds to commit to not reversing the policy.
“Will they commit to retaining Investment Boost as a permanent fixture of our tax settings to unlock growth, or will it be sacrificed to fund higher spending? This government’s position is clear.
“I would put to you that those who say they are on the side of growth and productivity but would sacrifice this effective policy are speaking out of both sides of their mouth.”
Edmonds, who is set to speak to the forum on Thursday afternoon, has previously said the Investment Boost policy is overall good for business, but stopped short of committing to retain it.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
