New Zealand Budget neglects small business sector

• KiwiSaver cost blow for many employers
• No specific help for small business
• Tax incentives for asset purchases

Finance Minister Nicola Willis’ second Budget will read well at credit rating agencies but delivers little support to New Zealand’s embattled small business sector, according to global professional accounting body CPA Australia. 

CPA Australia Regional Head Rick Jones said the increase in the default rate of employer KiwiSaver contributions to 4 per cent from 2027 was a blow to many businesses that were struggling to grow in one of the weakest economies in the OECD. 

“Though we support the goals of growing the KiwiSaver program, today’s announcement will add to employers’ costs and serve as another reason they may be reluctant to hire more staff,” Mr Jones said. “We also don’t think the government should be slashing its contribution.” 

He welcomed a new tax incentive, Investment Boost, which will allow businesses to immediately deduct 20 per cent of the cost of a new asset, on top of annual depreciation, from 22 May 2025. 

“This initiative will help support businesses by providing an incentive to invest in much-needed equipment, machinery and other assets,” he said. 

“The $577 million additional support for film production over four years will also have some modest flow-on to some niche small businesses.” 

However, he said the Budget contained little else that would reinvigorate New Zealand’s struggling business sector, in particular SMEs. 

“The Budget does not recognise the demographic and digital challenges facing New Zealand’s small business sector,” he said, 

“New Zealand small business owners have the oldest age profile in the Asia Pacific, and the sector’s digital technology adoption trails its Asia Pacific peers. 

“The SME sector needs more urgent, targeted support if it is to be the engine room of the economy.” 

CPA Australia urged the government to look beyond the Budget cycle and start developing programs that supported the small business sector at a grassroots level. 

“The small business sector accounts for about a quarter of New Zealand jobs,” Mr Jones said.  

“Some tangible support for the SME sector will help alleviate the relatively high unemployment rate of 5 per cent and might go some way to stemming the record exodus of young New Zealanders taking their entrepreneurial ideas to Australia and elsewhere.” 

Budget highlights include: 

• Treasury forecasts confirmed a return to operating surplus (OBEGALx) is not now expected until June 2029, leaving a meagre $1.3 billion operating allowance that leaving Defence the only significant winner. 
• Investment Boost allows businesses to immediately deduct 20 per cent of the cost of a new asset, on top of annual depreciation, at a cost of $1.7 billion a year. 
• The government contribution to KiwiSaver will be halved, to $260.72 per member per annum, saving $580 million in the first year. 
• The default rate of employee and matching employer KiwiSaver contributions rises from 3 per cent of wages and salaries to 4 per cent in two steps. From 1 April 2026, the rate will go to 3.5 per cent and from 1 April 2028, it will go to 4 per cent (though employees will temporarily be able to opt to remain at 3 per cent). 
• There were only minor adjustments to the taxation regime, with $75 million in additional tax deductions over four years to encourage foreign investment by relaxing thin capitalisation rules, and deferred taxation on employee share schemes for startups and unlisted companies. 
• The Treasury’s Budget Economic and Fiscal Update, released yesterday, forecasts gross domestic product (GDP) growth of 2.9 per cent to June 2026. 
• Core Crown revenue is forecast to continue rising over the four-year forecast period, while Core Crown government expenditure falls from 2026. 

Media contact

Rick Jones, CPA Australia Regional Head, New Zealand
[email protected]
+64 21 190 1039