Budget wishlist clear, but hopes not high

By KEVIN TAYLOR

Business leaders want a realistic prescription for higher growth in today's Budget - but they are not expecting anything that puts New Zealand on that path.

They expect a Budget that will be no surprise, fiscally responsible and long on rhetoric about lifting growth.

But the leaders are sceptical that the Government will offer anything realistic to boost growth rates - such as corporate tax cuts or a commitment not to rush ratification of the Kyoto Protocol.

There is also doubt that the Government's hands-on economic development approach, through myriad initiatives run by Industry NZ and other Government agencies, will have much impact.

Business Roundtable executive director Roger Kerr said the test would be whether the projections in the Budget were consistent with the Government's talk about wanting to improve the economy's performance.

"My expectation is that there won't be any such signs - and that then leads into a debate about whether the Government has really got a growth strategy."

Kerr said he expected a "few more handouts and working parties" but no action on the important areas.

For example, there would be no follow-through on the important recommendations of the wide-ranging McLeod tax review.

Kerr contrasts Australia's Budget last week with what the coalition Government will deliver today.

"In terms of the outlook it shows Australia motoring along significantly better than New Zealand."

The Australian Budget also had an approach the roundtable supported - maintaining lower Government spending, tightening up welfare, more privatisation, and more private-sector involvement in health and education.

Kerr said the New Zealand Government had said it wanted to listen to business.

"But I think we'd all say we haven't seen signs that they've heeded the basic messages."

Alasdair Thompson, the Employers and Manufacturers Association northern branch chief executive, said he wanted policies promoting growth in the Budget.

That included a clear commitment to restoring New Zealand to the top half of the OECD, which would require 4 per cent per capita GDP growth over 10 years.

The association wishlist to achieve that included lower taxes rather than running big surpluses, cutting Government spending and Crown debt, slashing business compliance costs, putting more investment into roads, attracting talented immigrants, and doubling the numbers in formal industry training.

But Thompson said the Budget would be "staid" and contain little of the wishlist.

He pointed out that Budgets were never the time nowadays for major changes anyway. Hopeful signs like the Government's much-hyped innovation framework released in February had just been rhetoric.

"I know a lot of leading business people worked closely with the Government on that. Many of them were bloody disappointed with what actually came out."

Business New Zealand executive director Anne Knowles warned businesses against expecting initiatives that would boost the country's OECD rankings.

She said the jury was still out on whether the array of hands-on business-help programmes would contribute to growth.

The big issues for business to watch were after the Budget, such as an early decision to ratify the Kyoto Protocol and the ongoing question of corporate tax rates.

Getting back into the top 10 of OECD countries was an aim shared by Business NZ and the Government.

She said Business NZ was watching for a more strategic approach from the Government to achieving that aim.

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