Winners and losers of Budget 2025: Economists give their verdict

Thursday, 22 May 2025

Economist Brad Olsen gives his view on Budget 2025.

Households won’t feel a huge difference from this year’s Budget, economist Brad Olsen said immediately after it was released, adding that’s not surprising given the small operating allowance the Government was working within.

While Olsen and the NZ Council of Trade Unions largely say businesses are the winners of this year’s budget, Retail NZ disagrees, saying there is unlikely to be an uplift in consumer spending or business confidence.

One of the main centrepieces of the Budget, released Thursday by the Government, was a $1.7b pot for speeding up businesses’ ability to claim tax deductions on capital items.

It’s also raising the minimum KiwiSaver contribution for employees and employers, from 3% to 4%, a gradual increase between next year and 2028.

“I don’t think that households will see a huge, huge difference from this Budget overall,” Olsen said, “and I think that’s probably realistic, given that the Government doesn’t have a lot of room to manoeuvre.

“They won’t be wanting to add a huge amount more debt because of course we know that the economic conditions at the moment, although they are improving, they’re still fragile.”

Cost of living relief in the Budget amounted to a rates rebate on the cards for low income SuperGold card holders, an average of $7 a week Working for Families increases and registration support for teachers.

Said Olsen, “You look at the global economic conditions at the moment, you know a lot of our trading partners might not be doing quite as well, and so I think the Government is wanting to leave a little bit of power dry to respond to further economic shocks, and that’s appropriate.

“From a household perspective, there is now a much greater focus on, the Government is not going to provide absolutely everything through to the public. There’s a much, much greater focus, I think, on people doing it themselves. You can see that with the likes of the KiwiSaver changes.”

‘The Government doesn’t have a lot of room to manoeuvre,’ Infometrics principal economist Brad Olsen said.

The winners of Budget 2025 were businesses, said Olsen, who labelled Finance Minister’s colloquially named ‘No BS Budget’ (or more formally, the Growth Budget) the “Switch Up Budget”.

“You are getting some areas of spending that are increasing but, to pay for that, Government is having to take something else away. On the other side, that does mean that overall, there’s not quite as much added in from this Budget, but below the surface, a lot of ins and outs.

“That will be meaning that, from a household perspective, there’s a few areas where you’ll be getting some more, but also areas where you’ll be losing what you got before.”

That said, Olsen was surprised at the savings the Government had managed to generate - $5.3b from savings, prioritisation and revenue-raising initiatives - which were largely funding new initiatives.

Taxpayers’ Union executive director Jordan Williams said with a rates rebate being offered to low income pensioners, the biggest winners were local councils.

“It is incredible that instead of tackling over-spending on local councils, the Government is basically giving them a get-out-of-jail-free card, by handing over taxpayer subsidies to pensioners, to subsidise out-of-control rates,” he said.

Union economist Craig Renney gives his view on Budget 2025.

This was the 11th Government Budget reveal Williams had attended and he was “underwhelmed” after the Government had talked up growth, but Williams said Budget 2025 failed to demonstrate it He also graded Finance Minster Nicola Willis a fail on spending in proportion to the economy, and getting on top of debt and deficits.

“We’re actually worse [off] now than we were at the last Budget. That’s really concerning.”

The losers in the Budget were the younger generation, said Williams. “Because of that ballooning debt and the underlying structural deficit that this budget doesn’t address.”

Craig Renney, economist and director of policy with the New Zealand Council of Trade Unions, said it was a “winning Budget” for some businesses.

“If you’re a big firm with lots of capital plans, you’re going to benefit from the proposed changes to accelerated deprecriation. But for many of the firms we have in New Zealand, and particularly for the service sector in New Zealand, there’s not a lot in there for you. And if you’re on a low income and in receipt of working for families…you’re really going to struggle.”

Retail NZ advocacy manager Ann-Marie Johnson said the sector was unlikely to see any quick improvements to consumer and business confidence following the Budget, nor any uplift in spending.

“There will be no economic growth without retail growth,” said Johnson. “Until consumers feel confidence about their future, they will continue to be careful about spending their discretionary dollars.”

While Johnson praised Government’s retail crime prevention focus, and the Government’s Investment Boost, which would allow businesses to immediately deduct 20% of the cost of a new asset, on top of depreciation, retailers would continue to “tighten their belts”.

“The light at the end of the tunnel is still a long way off.”

Business NZ chief executive Katherine Rich said Investment Boost was a “significant and forward-looking move”. Rich also praised investment in infrastructure across health, regional development and transport.