The Government has released Budget 2025, describing it as a responsible and forward-looking plan to drive economic recovery, improve public services, and address long-term infrastructure and social challenges without increasing debt or raising taxes.
Economic recovery and business support
Budget 2025 introduces a new Investment Boost tax incentive, allowing businesses to immediately deduct 20% of the cost of new assets from their taxable income. This aims to encourage investment, improve productivity and lift wages. Treasury expects it will add 1% to GDP and increase wages by 1.5% over 20 years.
Finance Minister Nicola Willis said, “Economic growth is how we raise living standards, create higher-paying jobs and fund the growing cost of the public services Kiwis depend on.”
The Budget also sets aside $200 million for a potential Crown stake in new gas field developments, to address declining reserves and ensure long-term energy security. Resources Minister Shane Jones said, “We must be prepared to stand alongside our petroleum sector as a co-investor if we want secure and affordable energy.”
Cost of living and family support
Changes to Working for Families will see 142,000 low- and middle-income families receive an average of $14 more a fortnight. SuperGold cardholders will benefit from rates rebates, and patients on long-term medications will be able to access 12-month prescriptions, saving up to $105 a year in GP fees.
Health and aged care
An additional $7 billion will be spent on health services over the next four years, with a $1 billion capital fund for upgrading hospitals. Funding will support more GP visits, elective surgeries, cancer treatments and aged care beds. A further $24 million will fund timely transfers of older patients from hospital to community care.
Education
The Government is investing $2.5 billion in education, including the largest boost to learning support in a generation. This includes:
- More than two million extra teacher aide hours from 2028
- 560 additional early intervention teachers and specialists
- Learning support coordinators for all Year 1-8 schools
- New classrooms, specialist facilities and capital upgrades totalling $572 million
Law and order
Budget 2025 allocates $1.1 billion to policing and justice, including extra funding for youth offending programmes, prison capacity and court system improvements. Christchurch Men’s Prison will be expanded with 240 new high-security beds via a public-private partnership.
Disability support
More than $1 billion has been allocated to disability services over four years, including $240 million to improve residential care for over 7,000 disabled New Zealanders. A new pricing model will ensure more consistent and sustainable funding.
Tertiary education
Tertiary education will receive a $398 million boost, focused on high-demand fields like health, engineering, teaching and digital technology. Tuition subsidies will increase by up to 4.75% in targeted areas.
Social welfare reform
From July 2027, most unemployed 18- and 19-year-olds will no longer be eligible for Jobseeker Support unless they meet a parental assistance test. The Government says this is designed to reduce long-term welfare dependence.
Infrastructure investment
Budget 2025 funds $6.8 billion in capital projects, including:
- $1 billion for hospital upgrades
- $712 million for new classrooms and maintenance
- $464 million for rail improvements
- $50 million for mental health facilities
- $167 million for Defence infrastructure
- $219 million for road repairs
Defence
Total Defence investment in Budget 2025 reaches $4.2 billion. Key projects include replacing maritime helicopters and Boeing 757s, new missile systems, encrypted radios, and drone defences.
Media and local journalism
The Budget includes $6.4 million to support local journalism through NZ on Air, aimed at expanding court, council and community reporting. RNZ’s funding will be reduced by $18 million over four years.
Savings and fiscal strategy
The Budget is funded by $21.4 billion in savings across 116 initiatives. This includes reprioritising spending and addressing legacy issues such as pay equity assumptions. The Government says these savings prevent the need for new taxes or increased borrowing.
Treasury forecasts 240,000 new jobs, stable inflation, falling interest rates, and a return to balanced books within four years. Ministers say Budget 2025 represents a turning point in New Zealand’s recovery, with a focus on growth, resilience and smarter government spending.
