From Deficit to Discipline: Budget 2025’s Key Messages to Employers

Advice Employer

The 2025 Budget may not have delivered big headlines, but for business owners, the fine print reveals meaningful opportunities to invest, grow and lead with confidence. After years of rising public spending and escalating debt, the Government is now focused on restoring fiscal discipline and improving efficiency across the board.

This Budget rewards those who are proactive — whether it’s investment decisions, workforce planning, compliance or strategic positioning, the edge belongs to those who act early. Now is the time to reassess your business’s position, refine your strategy and move with clarity. The landscape is shifting — and with the right approach, these changes can be turned into real advantages. To help make sense of it all, we’ve pulled together a snapshot of what matters most for employers.

Fiscal Outlook: Stable, Predictable and Business-Led
New Zealand’s economic outlook has weakened since the last economic projections in December 2024, with the country now facing a larger deficit and rising debt. However, conditions are expected to improve steadily. Economic growth is forecast to rebound from -0.8% in the year to June 2025 to 2.9% by 2026, holding steady through to 2029. Inflation is set to ease slightly to around 2% and unemployment is projected to fall from 5.4% to 4.3% by 2029. Net Core Crown debt is forecast to climb from $185 billion (42.7% of GDP) in 2025 to $238 billion (45.5% of GDP) by 2029 — more than double its share of GDP from five years ago. The current operating deficit of $5.5 billion is expected to improve gradually, with a return to surplus targeted by 2029.

Boosting the Basics: Funding for Infrastructure, Education, and Social Care
The 2025 budget addresses infrastructure, with funding committed for hospitals, schools, rail maintenance, prisons, defence and roading. Frontline services including education, healthcare, corrections and police have also been boosted, along with social care seeing dedicated new spending.

Investment Boost: A Timely Incentive to Grow
The new ‘Investment Boost’ initiative allows businesses to deduct 20% of the cost of new assets (like machinery, tools and equipment) immediately – including second-hand and imported items and excluding land/residential property. It’s designed to stimulate capital investment and productivity. If you’ve been holding off on upgrades or expansion, this is a smart time to act. The government is backing those ready to invest.

KiwiSaver Changes: Preparing for 2026 and Beyond
Significant changes are on the horizon for KiwiSaver and now is the time for both employers and employees to prepare. From 2026, employer and employee contributions will rise to a minimum of 3.5%, and then again to 4% by 2028. At the same time, government contributions will be halved and high-income earners (more than $180k per annum) will lose eligibility for this support altogether. In a move toward positive growth, 16–17-year-olds will now be eligible for employer contributions, helping to integrate younger workers into the savings scheme. While these changes will increase payroll costs for businesses, they also present a unique opportunity. KiwiSaver can become a powerful tool for employee retention and attraction in a competitive labour market. Proactive planning now will allow businesses to manage costs effectively while positioning themselves as forward-thinking and supportive employers. Turning these changes into a strategic advantage is key— those who plan early will reap the long-term rewards.

So, as you can see, in this year’s Budget, the government has favoured restraint over risk —delivering no surprise taxes, no wild spending and instead setting a steady course forward. It’s a landscape where smart, prepared businesses can position themselves to thrive.

For more information on the recent budget announcement, click here to read ‘Budget at a Glance’ by Nicola Willis (Minister of Finance).