“I am disappointed,” IT Professionals NZ chief executive Victoria MacLennan told the Herald after digesting Thursday’s fiscal announcements.
“While Budget 2025 introduces regulatory and investment mechanisms that may benefit the tech sector over time, it falls short on immediate and direct investment in workforce development, entry-level roles, or tangible support for digital capability building across the economy,” MacLennan said.
A “reprioritisation” strategy saw $212 million cut from existing tech, science and innovation spending, with some funds earmarked for new initiatives. All up, there was a net $45m reduction in spending on the sector.
“The $100 million injection into the Elevate NZ Venture Fund, the new Investment Boost tax deduction, and the creation of Invest New Zealand should all be useful levers — particularly for start-ups and those attracting foreign investment,“ MacLennan said.
“These measures are helpful, but they mainly support companies already positioned to grow.
“What’s missing is any meaningful investment in the talent pipeline.
“There’s no support for creating entry-level roles, no targeted internship or apprenticeship funding, and no real strategy to develop the digital workforce New Zealand needs.”
She noted an additional 1.75% in stem (science, technology, engineering and maths) spending, but said with few details, “it’s hard to assess whether it will have any real impact or whether digital tech will benefit”.
“The reality is we’re seeing graduates unable to find work, tech professionals leaving the country, and employers crying out for capability.
“Without a joined-up workforce response, regulatory tweaks and investment incentives, we won’t be able to deliver the kind of productivity and growth New Zealand is hoping for, which such a lost opportunity.”
Budget 2025’s “Investment Boost” policy, which will allow a business to expense 20% of the value of many new capital assets in the year of purchase, got the tick from two telco bosses.
Finance Minister Nicola Willis opted for accelerated depreciation over a corporate tax cut after IRD advised the former would be cheaper.
“At a One NZ level, and as a digital infrastructure business that invests hundreds of millions of dollars every year into our assets, the tax changes are welcomed,” One NZ chief executive Jason Paris told BusinessDesk.
READ MORE: Budget 2025: Government opted for accelerating depreciation over cutting the corporate tax rate
2degrees CEO Mark Callander said improving productivity was a major priority for its business customers and he believed the incentive would help such businesses.
“The challenge now is for business owners to direct this support where it will have the greatest impact. Investing in smart, future-focused technology, rather than simply upgrading vehicles or other short-term assets.”
The Government will cut $89.8 million in the 2025/26 financial year from its “business, science and innovation” programmes and a total of $212m through to 2028/29, according to Budget 2025 documents.
“This savings initiative reprioritises existing funding from the Science, Innovation and Technology portfolio and Economic Growth portfolio to support the implementation of initiatives to reform the science, innovation and technology system,” the Government says.
A tot-up shared by the Science Media Centre saw a net reduction of $45m in spending on the innovation sector.
The Government said tech, along with other sectors, would benefit from the new “Investment Boost” that will enable businesses to deduct 20% of a new asset’s value from that year’s taxable income, on top of normal depreciation.
As previously announced, Callaghan Innovation is being defunded from June 30, along with various existing funds and grants.
Crown research institutes and science organisations are in for a shake-up. There are plans to merge the Institute of Geological and Nuclear Sciences Limited (GNS Science) with the National Institute for Water and Atmospheric Research (Niwa), which is also acquiring MetService as a subsidiary.
Legislation will be introduced in the final quarter of this year for a new advanced technologies public research organisation (PRO), details of which are still pending. It will be established in 2026.
There was $20m allocated for the establishment of the new PROs ($10m in 2025/26 and $10m in 2026/27).
On the flipside, Budget 2025 earmarks $24.6m for costs associated with the “disestablishment of Callaghan Innovation”, which had about 350 staff (some of whom will move across to the new PROs and the new advanced research agency being established in 2026).
There was also $20.7m for “science, innovation and technology policy advice capability”, spread over the next four years, to help the Ministry of Business, Innovation and Employment (MBIE) with the sector overhaul.
“Overall, science funding has dropped by approximately $45m,” New Zealand Association of Scientists co-president Dr Lucy Steward said.
More broadly, $21.2m has been allocated in Budget 2025 and each of the three following years for a previously announced push to make New Zealand a more attractive target for foreign investment. The $84.6m total multi-year spend is largely “reprioritised” Callaghan funds.
A new agency established with the funding, Invest New Zealand, will “have a particular interest in investing in science, innovation, and technology”, the Government says.
The same amount was allocated for “operational and management costs” of the Gracefield Innovation Quarter – that is, Callaghan Innovation’s research campus in Lower Hutt.
Science, Innovation, and Technology Minister Shane Reti earlier flagged that there would need to be a medium-term plan for the buildings, which have suffered issues related to hazardous goods storage and are in need of repair, according to leaked documents.
The $20m funding for Gracefield is a 2025/26 one-off in a Budget where most items have four or five-year allocations.
A letter from Reti to Callaghan chief executive Stefan Korn earlier this year, sighted by the Herald, asks the CEO to “explore commercial opportunities to retain the Gracefield site as a centre for science and innovation”.
A $100m top-up was confirmed for the Elevate fund, which co-invests with private sector venture capital in start-ups.
The previous Government had not announced any plans to refresh the now nearlyexhausted Elevate, which was established in 2020 with $300m in funding.
The previous Government’s Start-up Council and various venture capital firms had been pushing for a $500m top-up.
The previously announced Prime Minister’s Science, Innovation, and Technology Advisory Council was granted set-up funding of $1.37m per year for each of the next four years.
Council members will include: Craig Piggott, the 30-year-old founder of agri-tech Halter, which has recently expanded its smart cow collars and other services into Australia and the United States; Merryn Tawhai, the director of Auckland University’s Bio-engineering Institute that has spawned several start-ups; and Komal Mistry-Mehta, the head of Fonterra’s venture capital arm.
Budget 2025 also saw $6.7m earmarked over the coming year (and $22.9m through to 2028/29) for the establishment of a new “Gene Technology Regulator”.
“The Gene Technology Bill [due to pass later this year] will end the effective ban on gene technology outside the lab, creating new economic opportunities,” the Government says.
Genetic modification has been a vexed subject in New Zealand since the controversy that swirled around the Royal Commission of Inquiry and the Helen Clark-era “Corngate” scandal 20 years ago.
Experts say technology advances have rendered New Zealand’s GM ban outdated.
Earlier this week, Revenue Minister Simon Watts discharged a bill to create a digital services tax or flat 3% tax on Big Tech firms’ New Zealand revenue, saying it was better for the Government to collaborate on global efforts to deal with profit-shifting.
Do you have questions about the Budget? Ask our experts - business editor-at-large Liam Dann, senior political correspondent Audrey Young and Wellington business editor Jenée Tibshraeny - in a Herald Premium online Q&A here at nzherald.co.nz at 9.30am, Friday, May 23.
Chris Keall is an Auckland-based member of the Herald‘s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
No surprises in another thin year for the sector.