Venkat Raman
Auckland, May 24, 2025
The New Zealand Budget 2025, presented to Parliament on May 22, 2025, aims to tackle the country’s most pressing social challenges. With a focus on targeted investments, data-driven interventions, and long-term sustainability, this Budget introduces significant measures to improve social welfare, support abuse survivors, and address housing needs.
Measuring the Dollar
Finance Minister Nicola Willis has emphasised that every dollar spent must deliver measurable outcomes, ensuring public funds are used effectively to create lasting improvements for communities across the country.
The Budget has several key measures aimed at stimulating economic growth and improving financial security for New Zealanders. A major highlight is the Investment Boost Tax Incentive, which allows businesses to deduct 20% of the cost of new productive assets such as machinery, tools and equipment from their tax returns, encouraging investment and job creation.
Changes to KiwiSaver include halving the government contribution to 25 cents per dollar, with a maximum of $260.72, and removing contributions for earners above $180,000. Employer and employee contribution rates will gradually increase from 3% to 3.5% from April 1, 2026 and to 4% from April 1, 2028. The Budget also includes $7 billion for Health Services over four years, $1 billion for Hospital Infrastructure, and about $400 million for Prison Funding. Additionally, $75 million has been allocated to attract Foreign Investment in Infrastructure. These measures reflect the government’s focus on economic resilience, targeted social spending, and long-term fiscal sustainability.
The key components of Budget 2025 examined here are the Social Investment Fund, Improvements to the Redress for Abuse in State Care and the Flexible Housing Fund. These initiatives reflect the government’s commitment to strengthening social services and ensuring vulnerable New Zealanders receive the support they need.
Social Investment
The government will insist on accountability and return on investment for supporting programmes with a proven record of success. The Social Investment Fund, managed by the newly established Social Investment Agency, will oversee targeted early intervention programmes aimed at breaking cycles of poverty, youth offending, and social disadvantage. The government will $275 million to expand targeted interventions in key areas such as education, youth support, and community welfare. Funding will be prioritised for initiatives that demonstrate measurable success in improving long-term outcomes.
Among the first initiatives to receive funding are Parenting Support Schemes, State Care Prevention Programmes and services aimed at assisting families facing hardship. By tying funding to measurable results, the government aims to ensure resources are spent on programmes that deliver genuine benefits to communities. Over time, this fund is expected to expand, replacing traditional contracting models with a more outcome-driven approach to social welfare.
Redress for Abuse in State Care
Budget 2025 has allocated $774 million to improving the redress system for survivors of Abuse in State Care and enhance compensation payments and support services. Survivors will receive higher financial redress, with the average settlement amount increasing to $30,000. Additional funding will be provided to ensure those who previously settled claims receive top-up payments, maintaining consistency across cases.
While some had called for an entirely new independent redress system, the government has opted to refine and strengthen the existing framework to accelerate access to compensation and reduce wait times. Enhanced service delivery and additional resources will ensure survivors receive timely support, marking a significant step towards addressing historical injustices.
Addressing Housing Shortages
The Flexible Housing Fund, introduced in Budget 2025, consolidates previous housing programmes into a streamlined contestable fund. With $41 million in operating funding over four years and $250 million in capital funding over ten years, this initiative is designed to deliver between 650 and 900 new homes beginning in July 2027.
The Fund will enable community housing providers, Māori organisations, and Kāinga Ora to develop affordable rental properties and social housing in regions with the greatest need. By replacing older schemes with a more flexible funding approach, the Government aims to accelerate housing development and improve access for families experiencing housing insecurity.
Disability Support Services
Budget 2025 provides $140 million in new funding for Disability Support Services to ensure continuity of essential care and expanded access for disabled individuals across New Zealand. This funding will help cover increasing service costs, improve residential care options, and support the development of a new pricing model for community group homes. Targeted funding has also been set aside to enhance specialised services for individuals with high and complex needs, ensuring better accessibility and improved quality of care for those who rely on disability services.
This Budget represents a shift towards more strategic, data-driven funding models that prioritise measurable results. By investing in social investment funds, strengthening redress for abuse survivors, and expanding housing support, the Government aims to address entrenched social challenges through targeted, evidence-based solutions.
The success of these initiatives will depend on effective implementation, rigorous evaluation, and continued investment in essential services. If executed well, Budget 2025 could redefine social welfare in New Zealand, ensuring taxpayer money is spent efficiently while delivering tangible benefits for vulnerable communities.
