Good but growth rates still a worry

By SIMON HENDERY

"Good, but ... ," appears to be the business community's assessment of the Budget.

"Michael Cullen's 'steady as it slows' Budget meets his criterion of few surprises but it doesn't bring the Government's own growth targets any closer to realisation," was Business New Zealand chief executive Simon Carlaw's reaction.

"The Budget certainly includes several measures that we need to see more of, notably in the continued focus on skill development and workplace training, and in bold new steps to help small companies grow jobs by reducing their tax compliance costs," Carlaw said.

"There are, however, two hard realities. First, the good times are over. The past 30 months of solid economic achievement are at an end. Second, the Government's ability to invest in New Zealand's future prosperity is about to become much more difficult as the options begin to shrink."

Auckland Regional Chamber of Commerce & Industry chief executive Michael Barnett congratulated Cullen on the $3.8 billion surplus for 2003/04, before adding his "but".

"These are 3.8 billion reasons why there should have been a tax cut and a bold investment programme to repair transport and energy infrastructure for driving a first-world economy.

"Such a strategy would have helped sustain the 4.4 per cent growth rate predicted for this year. Instead, a too cautious Dr Cullen is planning to reduce growth to an average 2.8 per cent over the next four years. The numbers clearly show he should be more confident of businesses' ability to create the increased wealth we all agree New Zealand requires."

Business Roundtable executive director Roger Kerr said although previous policy reforms and recent favourable conditions had helped New Zealand weather the international downturn and maintain a robust fiscal position, "clearly the trend growth rate is falling rather than rising, in line with business sector warnings that too many Government initiatives have been anti-growth".

Kerr said the Government was nowhere near achieving growth rates consistent with its desire to restore this country's average incomes to the top half of OECD rankings.

"A raft of small-scale grants, taskforces and summits does not add up to a credible growth strategy.

"There is no sign that the Government recognises that increasing regulation of business and roadblocks like the Resource Management Act are creating an uncertain and hostile environment for private investment."

Wellington Regional Chamber of Commerce chief executive Philip Lewin welcomed new spending initiatives, such as those aimed at reducing tax and compliance costs for small to medium businesses, and more funding for industry training.

"We fully support the Government's efforts to foster our smart service industries and get better access for our services exporters offshore," he said.

"As we all know, the broader external outlook is rather more complicated. This means we have to maximise our competitiveness across the whole policy spectrum.

"For this reason, we still want the Government to look hard at reducing and harmonising business and personal tax rates. But overall, we think this is a good effort."