National hits business button

By KEVIN TAYLOR

National's business-friendly economic policy has been warmly welcomed by business groups.

The chorus of approvals yesterday ranged from chambers of commerce through to the Business Roundtable, although unionists said it was the "tired old National strategy" of the 1990s.

The centrepiece is the tax cuts - with a target of getting both the top personal rate and the company rate down to 25c within 10 years - but it also includes plenty of other ideas from business or, in several cases, from reports the Government has commissioned and then shelved.

Among those are an assault on compliance costs, establishment of an Investment Promotion Agency, cutting Government spending to below 30 per cent of GDP, active measures to meet skill shortages and greater use of public-private partnerships to build infrastructure.

Business New Zealand chief executive Simon Carlaw said the package was more than a tax policy, it was the basis for a balanced growth strategy.

"Given our advocacy of a balanced growth strategy and the importance of moving on one, we certainly commend the National Party for having this as the core of their election policy package."

Party leader Bill English said if New Zealand was to climb back up the international wealth ladder, and provide world class health, education and public services, it must build on the unique strengths of the economy.

That would mean supporting businesses - especially the small owner-operator - by encouraging investment and reducing red tape.

The policy mix was, he said, aimed at lowering the costs of doing business, removing the roadblocks to doing business and increasing the rewards for success.

The strategy is underpinned by the personal and corporate tax cuts. Over four years National plans to reduce the top personal rate on earnings over $60,000 from 39c to 32c and the corporate rate from 33c to 27c.

Extra spending is allocated at $800 million a year in the first term.

English said National was embarking on a programme of raising long-term growth rates because meeting New Zealanders' rising expectations needed a strong, growing economy.

"Our plan for prosperity includes a number of strategies aimed at achieving this goal."

These included raising the skills of the workforce, cutting business compliance costs, creating a supportive innovation environment, encouraging private/public sector investment, and lowering business and personal taxes.

Carlaw said the strategy appeared to be balanced, but further detail was needed so Business NZ could measure National's plans against its 20-point economic "scorecard" of goals for a wealthier country.

Carlaw said the policy firmly made the point that it was in all New Zealanders' interests to expand the size of the cake to keep quality social spending at the level the public expected.

It was very encouraging to see a major political party place growth at the centre of its core policies, he said.

Business Roundtable chairman Dr Murray Horn also applauded National's economic ambitions.

He said the Business Roundtable had been quick in the past to criticise National when it felt the party did not measure up.

"We are now equally quick to support these very positive policy developments. Bill English's willingness to raise National's sights is refreshing.

"National is putting forward a positive vision for New Zealand and its plan for achieving it is shaping up in a credible fashion," Horn said.

He said the Labour Government was also aiming for sustainably higher growth rates, but its own projections suggested the economy was not on a path to achieve them.

Horn said parts of the package needed more development and there were notable omissions, like local government and welfare.

It was "inconceivable" that the growth and fiscal goals could be achieved in an economy so weighed down by welfare dependency.

The Auckland Chamber of Commerce gave National a nine out of 10 rating.

Chief executive Michael Barnett said that for more than two years the chamber and other business organisations had pushed competitive tax rates (especially with Australia), axing the 39c "success tax", cutting and better controlling Government spending, a coherent growth strategy, and measures to cut compliance costs.

National's package showed business concerns had been heard.

The Employers and Manufacturers Association northern branch said National's focus on achieving faster growth and cutting company tax to help do that would be appreciated.

Chief executive Alasdair Thompson said business applauded the new focus on faster economic growth rates.

"Without a better growth rate we can forget about more health, education and environment funding.

"Better growth is the key to funding our ageing population and the delivery of First World health and educations outcomes."

The new policy showed that National was raising its sights above its traditional rural support base to start building a vigorous, economy-wide, enterprise-oriented society.

But Council of Trade Unions president Ross Wilson said English had adopted the "tired old National Party strategy" of the 1990s by promising tax cuts for the rich.

"We have seen this all before.

"Unfortunately it is those on low and middle incomes who will miss out."

Wilson was concerned at the party's plans to change the Employment Relations Act and privatise workplace accident compensation.

He said it was not reassuring that tax cuts would be funded through removing pre-funding of superannuation.