Business hopes for Budget

At Ullrich Aluminium in Manukau City - the employer of about 670 people in New Zealand and Australia - owner and managing director Gilbert Ullrich sounds a dismal tone.

"Cullen seems uninterested in manufacturing and besotted with the free trade agreement with China, which he seems to think is going to solve all our problems."

Scanning a list of expected Budget measures, he says: "We face an uphill battle and all of these proposals are dressings and bandaids."

With the Budget five days away, the Business Herald is asking business people what they are hoping for.

One of Ullrich's wishes - tax cuts - is a common theme.

At listed infrastructure investor Infratil, Tim Brown says the Budget should include a lower corporate tax rate "to be funded by the Australian-owned banks paying the standard corporate rate of tax on their New Zealand profits to the IRD".

"I'd like to see lower corporate tax rates - 30 per cent to match Australia," chips in Ullrich.

Another tax-cut fan, Brent Impey from CanWest MediaWorks, adds: "We believe another responsible initiative would be some form of tax incentive for retirement savings. Apart from the benefit of future-proofing the Government's superannuation liability, this would also help New Zealanders become more self-sufficient in relation to their future."

The shape of the planned work-based savings scheme - and whether it is compulsory or voluntary - is a big talking point among those quizzed by the Business Herald.

At Mercer Human Resource Consulting, head Tim Jenkins says any workplace savings initiative is a positive step.

"Mercer would like to see a proposal for an adaptable, well designed and well thought-out workplace savings scheme that supports existing workplace superannuation schemes and does not detract from their value.

"We believe it is vital that the rules for the new workplace savings schemes enable employers to easily adapt their own existing schemes to be approved schemes."

He hopes a savings initiative will not create pressure on employers to increase employees' salaries by a similar amount to match any workplace savings made.

Retailers Association chief executive John Albertson says it supports the announcement of a work-based savings scheme, provided it is voluntary.

"We believe such an initiative is in the national interest in that it will provide better incomes for retired people in the longer term, which will be good for retail.

"However, we consider individuals' contributions are best collected through IRD and there should be no compulsion for company contributions."

He says proposed modifications to tax policy will appeal to medium and smaller retail business enterprises, particularly the plans to align provisional tax to the three GST payment dates, to relate tax payments to GST turnover, and to reduce fringe benefit tax on vehicles.

"However, the association is disappointed the Government has still not addressed the need to reform our tax regime to align the top personal rate (39 per cent) to our current corporate rate (33 per cent), nor to align our corporate tax regime (33 per cent) to policies followed by our major trading partners such as Australia where the top company tax rate is 30 per cent."

Infrastructure is weighing on the minds of Stephen Jacobi, of the Forest Industry Council, Jon Mayson, of the Port of Tauranga, and Evan Davies, of casino and entertainment company SkyCity.

"If you are uncompetitive because of the exchange rate, you have to make sure that is not being exacerbated by a lack of investment in other areas," says Jacobi.

At SkyCity, Davies' major concerns are "traffic congestion, poor public transport options and the security of electricity supply. Infrastructure funding needs to be prioritised and real progress made."

A healthy dollop of direct self-interest - sometimes twinned with a bit of humour - turns up in some of our business people's Budget wishes.

Infratil's Brown says the Budget should include the sale of Whenuapai Airport, "which would obviate the need for the Government to spend hundreds of millions on Auckland's roads so traffic can continue to flow to Auckland International Airport".

Developing Whenuapai is, of course, an Infratil idea.

At CanWest MediaWorks, Impey said more money should go into health rather than extravagant luxuries such as subsidies for his rival, TVNZ. "Why does TVNZ need tens of millions of dollars additional funding when we have waiting lists for surgery?"

Davies says: "We'd like to see further investment in promoting New Zealand as a destination for international tourists. The Lord of the Rings has given us a tremendous platform to capitalise on."

For Davies, other key issues included the need for more Government investment in training to beat the skills shortage and welcome moves to reduce compliance costs for businesses.

Mike Patrick, executive officer of the Petroleum Exploration and Production Association of NZ, says the oil and gas industry is not expecting anything special from the Budget, but is still pushing for changes in the way depreciation rules apply to the industry.

It was unique in the way that companies had extremely high up-front capital costs before any profits came. It was also often a long time after expenditure before the profits would come.

"We're not asking for hand-outs," he said.

Neither did the industry mind paying its fair share of royalties and taxes, but it wanted an appreciation from tax authorities of the way in which the sector worked.

The Government last year allowed foreign-crewed oil rigs and seismic research vessels to keep working in New Zealand waters for more than six months without being hit with company tax demands.

Previously these rigs left New Zealand rather than start paying the tax. Patrick said the association was now lobbying for the crew supply vessels and other support staff for oil rigs to be also exempted.

For computer chipmaker Intel, better broadband equals better business, so the computer processor maker is hoping the Budget includes a major investment in the internet.

Software giant Microsoft is interested in the Budget's tax effects and how they will compare with elsewhere in the world.

"The tax and compliance regimes in New Zealand need to be framed with regard to how businesses would view that from an international perspective," says Ross Peat, Microsoft New Zealand managing director.

The Government's proposed changes to the depreciation scheme, which would allow companies to faster depreciate short-lived, high-value assets - such as computers - would also present a windfall for companies such as Microsoft.

WHAT BUSINESS WANTS

BRENT IMPEY

CanWest MediaWorks
Chief executive

"First and foremost we'd like to see cuts to the corporate and personal tax rates. Our burgeoning economy has been following a similar path to our Anzac cousins in Australia, and Peter Costello's bold tax cuts announced in his Budget this week reflect a confident and strong economic base. There is nothing to stop Cullen from having the same level of confidence here."

JON MAYSON

Port of Tauranga
Chief executive

"I want to see an absolute commitment, not just in words but in actions, to a major infrastructure spend on roading." 

BRUCE SHEPPARD

Shareholders Association
Chairman

"If work-based subsidised plans are to be the norm, workers must be given the choice of designing and running their own super funds, against whatever rules are set down for such plans. In the 1980s, personal super schemes were common and it would not be a bad thing if this occurred again. They are still common in the US. On the investment front, we want neutrality between asset classes and ownership structures."

SARAH TROTMAN

Business support sector specialist

"Absolutely top of the list for me would be to see some additional funding to encourage more collaboration within the critical business support sector - which includes economic development agencies and business mentor programmes and is highly fragmented to say the least. It has been well proven that additional business support for business owners leads to further business growth which leads to wealth generation, wealth generation equals more jobs."

TIM BROWN

Infratil
Executive

Three wishes from a long list.

The Crown to sell its interest in Air New Zealand, "so it no longer feels necessary to scrutinise policy from the perspective of whether it suits the national carrier".

The Crown to slow capital spending "so as to leave a few construction workers available for the private sector".

"A fair and efficient recycling of income generated from carbon tax."

VANCE ARKINSTALL

Investment Savings & Insurance Association
Chief executive

"New Zealand has a big savings problem that will ultimately require a big solution. We will not know until the Budget if the solution announced will be sufficiently brave and bold, but it will be a major signal from the Government on the importance of kick-starting a saving culture in New Zealand and it will be the first positive step in close to 15 years to assist New Zealanders to take greater personal responsibility for future financial security."

STEPHEN JACOBI

New Zealand Forest Industry Council
Chief executive

"We want to see the Government start to address the problems in the export economy as a result of the high exchange rate. The response so far has been 'buckle your belts and get your costs down' - we need something more than that now. A start will be changes to the depreciation regime."

TONY EGAN

AFFCO
Chief executive

The Government needs to be more prudent in its spending.

"I realise we have a floating exchange rate but uncontrolled Government spending has not assisted New Zealand's inflation rate and, as a consequence, our dollar has been kept artificially high. That's having a real impact on our ability to export."

He'd also like to see some reform of the company tax structure to bring it back in line with Australia.