Labour has unveiled a $1.56 billion election policy package aimed at supporting New Zealand’s small businesses through faster invoice repayments, tax relief on new equipment, and reduced compliance costs. Party leader Chris Hipkins stated that small businesses represent around 42% of the country’s gross domestic product, arguing that owners are currently being squeezed by rising costs and falling demand under the National government.
Labour’s Action Plan and Proposed Costs
Named “A Fair Go,” Labour’s action plan outlines three core proposals designed to ease financial and administrative pressures on operators. According to the party, the total $1.56 billion package over four years would be funded by refocusing the government’s investment boost policy. Small business spokesperson Dan Rosewarne noted that the plan aims to stop owners from spending evenings chasing overdue invoices and filling out forms.
The first proposal requires large businesses to pay invoices of $25,000 or less from small suppliers within 15 days, while also mandating public disclosure of payment speeds. The second proposal increases the instant asset write-off threshold from $1,000 to $10,000 for businesses with an annual turnover below $10 million, letting them immediately deduct equipment costs from tax bills. The third proposal raises the GST registration threshold from $60,000 to $80,000, which Labour says would remove the need for about 35,000 of the smallest businesses to register for GST.
Political Backlash and The Investment Boost Debate
Luxon recently apologised for comments made at a Rotorua Business Chamber event, where he told a business leader her concerns represented a “negative view” and cited a “parent-child mentality” regarding government support. Luxon later conceded that he got it wrong and that many small business owners are doing it tough.
Finance Minister Nicola Willis slammed Labour’s policy response, characterizing the refocusing of the investment boost scheme as a “$5 billion tax grab.” According to Willis, scrapping National’s $6.6 billion Investment Boost to fund Labour’s $1.56 billion plan strips business owners of incentives to purchase transformative, productivity-enhancing equipment like commercial coffee machines, manufacturing tools, or utes. Willis further argued that Labour’s proposed capital gains tax would add commercial property costs for businesses.
Economic Context and Potential Scenarios
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