Investment Boost: Why Labour's $7.7b and Willis's $5.5b Do Not Match
Labour says cancelling Investment Boost would save $7.7 billion. Finance Minister Nicola Willis says the policy costs $5.5 billion over the forecast period.
The gap is $2.2 billion. On 8 October 2026, that difference was still unresolved, with neither side publishing full workings to allow a direct reconciliation, according to RNZ.
Investment Boost allows businesses to claim an immediate 20 percent tax deduction on the cost of qualifying new assets. It is a form of accelerated depreciation. That means some tax relief arrives earlier. The 20 percent is claimed on top of normal depreciation.
Inland Revenue says businesses claim depreciation on the remaining 80 percent of the asset's cost after the upfront deduction. The policy does not change the total deductions claimed over the life of an asset. It changes the timing. Improvements to existing assets can qualify. The rules apply to assets first available for use on or after 22 May 2025, according to Inland Revenue.
The policy was introduced in Budget 2025 and has passed into law. The Government described it at the time as a tax incentive to encourage businesses to invest, grow the economy and lift wages, according to the Beehive.
Labour is using the $7.7 billion figure as fiscal headroom. The party said the savings from cancelling Investment Boost would help pay for its election promises, according to RNZ. Labour has admitted a $90 million error in its Investment Boost figures while rejecting Willis's claim. That admission was reported on 6 October and again in a finance debate round-up on 7 October.
National is defending the policy and campaigning to keep it. The party unveiled a 47-point small business plan on 7 October that includes retaining Investment Boost. National describes it as an immediate 20 per cent deduction for eligible productive assets of any value and businesses of every size, according to RNZ.
Simplicity chief economist Shamubeel Eaqub said it was hard to judge the dispute without seeing the parties' workings. He said National is quoting the cost of keeping Investment Boost while Labour is quoting the revenue from stopping it. Dentons partner Bruce Bernacchi said he had not seen the modelling behind the figures but that Willis's explanation made sense.
The stated policy intent in Budget advice was to reduce effective tax rates, according to Budget-related tax advice released in August. The Government anticipates the policy will lift New Zealand's GDP by approximately 1 percent, according to Chambers and Partners. The OECD's 2026 Economic Survey of New Zealand discusses the programme.
Separately in the election-2026 fiscal debate, National has said it wants to redirect foreign aid money into funding for new medicines if it leads the next government. That includes a boost to Pharmac's budget and to cancer screenings.
The broader context here is one Press Gallery regulars will recognise. Labour would cancel the incentive and reallocate the proceeds. National would retain it as part of its small business offer. The cost of running an accelerated depreciation measure and the revenue from repealing it are not always symmetrical. The first reflects tax foregone while the policy runs, with guesses about take-up, eligibility, investment timing and depreciation profiles. The second reflects tax that would then be collected, with guesses about what investment would still go ahead and how deductions would have been spread without the upfront 20 percent. Small changes in those guesses compound over four years. That is why Eaqub's distinction matters. One figure prices retention. The other prices removal. Without the models, the $2.2 billion gap cannot be adjudicated from press statements alone. Voters and analysts have two headline numbers, a conceded $90 million error, and no agreed baseline.
