The Government’s 2025 Budget — dubbed the “Growth Budget” — outlines a range of new investments, savings, and policy reforms aimed at rebuilding the economy and funding essential services. The Restaurant Association is welcoming the Government’s Investment Boost tax incentive as well as tourism infrastructure support and screen production support which will see flow on benefits for our industry, However the Budget also signals challenges for small businesses, including an announcement to increase minimum employer KiwiSaver contributions. We’ve summarised the key opportunities and pressures for our sector below.
The Restaurant Association’s priorities are much the same as they have been for many years now:
- Tourism marketing: allocating a portion of the annual international tourism marketing budget to highlighting food and beverage tourism.
- Immigration reset: policy changes must be progressed quickly, to create a system that recognises the unique skills required in hospitality and provides clear pathways for workers to enter and grow within the sector.
- Workforce development: building a highly skilled domestic workforce is essential. The Association wants to see greater support for training programs developed and delivered by industry experts.
Positive outcomes
Investment Boost tax incentive
Businesses can deduct an additional 20% of the value of new productive assets (on top of depreciation), improving cashflow and encouraging investment in equipment, kitchen upgrades, or digital tools. This means a lower tax bill in the year of purchase, with the remaining book value depreciating at normal rates.
We have been pushing for changes around tax deductibility for investment in assets — particularly for small businesses — so today’s announcement is a positive step. So many of our businesses in the hospitality industry are small and micro enterprises, many of whom just need a bit of support to enable them to invest in and grow their business. However the challenge that remains for many in our industry is securing the cash required to make these investments.
Tourism & Hospitality Boost via IVL
The Restaurant Association is also pleased to see that the Minister for Tourism and Hospitality will be responsible for $190 million of revenue from the International Visitor Conservation and Tourism Levy in the 2025/26 financial year. We supported an increase to the levy, knowing that increased levy revenue would increase the amount that could be invested in growing tourism – which is crucial to supporting our industry.
With just over $130 million allocated for the promotion of New Zealand to key markets as a visitor and business destination in the coming year, we’re keen to ensure that a portion of this is allocated to promoting our national and regional food stories. Food and beverage tourism is becoming increasingly popular, and we want to ensure New Zealand makes the most of this opportunity.
Other benefits from the announcement include:
- Cost of Living support – Increased Working for Families payments and SuperGold card rebates puts more money in the economy which may lifting consumer spending in local cafés, restaurants, and attractions.
- Invest New Zealand – A new agency to attract foreign direct investment, focused on high-growth sectors, could lead to increased capital flows to innovation-focused hospitality or tourism businesses.
- Screen production rebates – Over $584 million in combined domestic and international screen production support will attract filming to NZ, with potential associated flow on benefit for hospitality.
However, members have already raised questions about the Government’s changes to Kiwisaver announced in Budget 2025. Employer (and employee) contributions will rise from 3% to 4% by April 2028 and Kiwisaver will become eligible for 16 and 17 years olds. This presents added cost pressure for hospitality and tourism businesses that are labour-intensive and operate on tight margins.
So many young people enter the hospitality industry as their first job, we have no doubt that the majority of 16 and 17 year olds who are in work are employed in service industries like ours. The Government contribution will also be halved to 25 cents per dollar, to a maximum of $260.72, so while the Government cuts how much it contributes to Kiwisaver, our businesses will be filling that gap by paying a larger contribution — and to more people.
The Restaurant Association will be working through the details of these changes, and other initiatives announced in the Budget, to ensure the hospitality industry is able to continue on a path to recovery.
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