By Russell Palmer of RNZ
Finance Minister Nicola Willis is challenging Labour to commit to keeping her Investment Boost policy if elected on November 7.
The centrepiece of last year's Budget, the boost allows businesses to deduct 20% 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 gross domestic product by 1%, wages by 1.5% and capital stock by 1.6% 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 today.
She said about 40% of firms investing in the next five years said the policy had increased their investment spending over the past 12 months, with 29% of those reporting a "moderate" increase and another 11% a "significant" increase.
Looking ahead, 49% planning to invest in the next five years were saying Investment Boost was positively influencing their plans, with 14% 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," Willis said.
"That matters because capital deepening is how productivity rises and productivity growth is the only way we will grow wages sustainably over time."
The minister said the policy would only work if businesses believed it would endure.
"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 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 this afternoon, has previously said the Investment Boost policy is overall good for business but stopped short of committing to retain it.
