Labour Proposes $1.56 Billion Small-Business Relief Funded by Investment Boost Repeal

The Labour Party on 6 August 2026 announced a $1.56 billion package of targeted relief for small businesses, financed by repealing National's Investment Boost scheme.

Labour's Small Business Action Plan focuses on cash-flow and compliance measures for smaller operators rather than broad investment incentives.

The package requires large firms to pay small suppliers within 15 days on invoices up to $25,000. It raises the instant asset write-off threshold from $1,000 to $10,000, but only for businesses with annual turnover below $10 million. It also lifts the GST registration threshold from $60,000 to $80,000.

These changes would remove GST obligations for around 35,000 micro-entities, according to Labour estimates. According to Stats NZ, New Zealand has approximately 612,417 businesses, of which 97 percent are small with fewer than 20 employees.

The measures carry an explicit four-year cost of $1.56 billion. Labour plans to fund them by redirecting resources from National's Investment Boost policy.

Investment Boost: The Policy at Stake

National introduced Investment Boost in Budget 2025. The scheme took effect on 22 May 2025 and offers all businesses a 20 percent first-year deduction on new depreciable assets, with the balance depreciated under standard rules.

Treasury's Budget Economic and Fiscal Update 2025 identified the policy as a key revenue measure supporting capital spending during subdued growth. Treasury and Inland Revenue estimated Investment Boost would lift GDP by 1 percent and real wages by 1.5 percent over 20 years.

The Political Response

Finance Minister Nicola Willis described the Labour approach as scrapping a major growth tool in exchange for limited relief.

Scrapping National's $6.6 billion Investment Boost to fund a $1.56 billion fig leaf means business owners lose the incentive to invest in genuinely transformative, productivity-enhancing equipment. It is nothing more than a $5 billion tax grab dressed up as a business policy.

BusinessNZ chief executive Katherine Rich welcomed elements of the small-business relief but strongly opposed narrowing or repealing Investment Boost, calling it one of the most important productivity policies introduced in recent years.

Labour cited an IRD survey of 826 responses in which 53 percent of businesses reported no impact from Investment Boost and only 7 percent viewed it as significant.

Chartered Accountants Australia New Zealand head of tax John Cuthbertson offered qualified support, noting it would encourage greater market participation.

Fiscal Trade-Offs and Competing Philosophies

The 15-day payment mandate would impose a new statutory requirement on private-sector transactions. New Zealand currently relies on voluntary codes and government procurement rules for prompt payment.

Finance Minister Willis framed the arithmetic as Labour taking $6.6 billion of Investment Boost funding and shrinking it to $1.56 billion, leaving more than $5 billion redirected away from business investment. Labour's policy retains scope for additional measures from the remaining fiscal envelope, though separate commitments such as restoring pay equity settings add further pressure on overall fiscal space.

The exchange highlights two competing philosophies. National emphasises supply-side incentives available to firms of all sizes to lift productivity and investment. Labour prioritises immediate cost reduction and cash-flow certainty for the smallest operators that make up the overwhelming majority of the sector.

Both parties will contest support among small-business owners ahead of the November election. Small firms account for 97 percent of New Zealand's approximately 612,000 businesses, and any shift in incentives carries direct implications for compliance burdens, investment decisions and growth prospects.