KEY POINTS:
Business reaction to today's Budget has ranged from a muted welcome acceptance to a more dismissive shrug of the shoulders.
Business New Zealand said it made some "useful microeconomic reform", but overall had not delivered a "transformational change" for the business environment.
Chief Executive Phil O'Reilly said the Budget delivered some welcome investment in the productive capacity of the economy, including changes in research spending, broadband and company compliance.
The decisions on the international tax regime were generally positive.
"The Government's commitment to increasing skills is particularly welcome," O'Reilly said.
But the thousands of small and micro-sized businesses that pay tax at the top tax rate had received little relief.
"A stronger reduction in their tax burden would have made a significant difference to the nation's rate of economic growth and it is disappointing that this opportunity was not taken.
"Also missing from the Budget was any signal about reducing government spending, a key driver of our high exchange rate."
Taking a less conciliatory approach was Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson who asked "Was that it?"
Cutting tax by $1.5 billion after running surpluses four times that amount for years was "patronising and a complete let down," said Thompson.
"Its disingenuous to promise tax cuts for the next three years while the polls say the government won't be around to deliver them,".
"Telling people with pockets emptied by rising food and fuel prices they can only have $12 to $28 a week to prevent inflation is laughable.
"Its nonsense to claim tax cuts have to be staggered over three years to avoid inflation; today's inflation is either all imported (oil) or determined by international supply and demand (food, dairy products).
"Cutting tax wouldn't have any effect on them, and neither would higher interest rates.
"Dr Cullen should understand his increased spending on transport and broadband is expected for non-political reasons as it lays the foundation for higher productivity and is therefore also not inflationary.
"We fully support the added spending on health and education when they are accompanied by increases in productivity.
"But its all too easy for the government to fritter taxpayers funds on non-productive spending and ideological regulation that requires armies of public servants (20,000 more since taking office) to enforce."
Auckland Chamber of Commerce chief executive Michael Barnett also welcomed the tax cuts elements of today's budget, as "going some way to restoring the purchasing power of all New Zealanders, given increases in food, fuel and interest rates."
"Unfortunately the opportunity that has been lost was the chance to align both corporate and personal tax rates to those in Australia", said Barnett. "This in time would have reflected in New Zealand's standard of living and skills retention.
Initiatives identified by the Auckland Chamber of Commerce from today's Budget as being "positive for business and an investment in the economy" included:
* Increased funding for Ministry of Foreign Affairs "from a business perspective we would like some assurances that these funds will be targeted towards activity that will grow export opportunities for all NZ businesses."
* Beachheads "this activity is focused on high growth companies entering selected markets and should be further expanded."
* Broadband "the availability of a $500m fund to accelerate broadband access to business, local government and schools and to extend the reach of broadband to under-served regions."
* Simplification of tax compliance and therefore paperwork for SMEs.
* Skills strategy.
- NZ HERALD STAFF
