Growth missing in Budget

By JIM EAGLES Business Herald editor

The country's top business leaders are decisively unimpressed by the economic growth policies outlined in Thursday's Budget.

Prime Minister Helen Clark's Budget statement was headlined "Budget builds capacity for growth" and she declared it "strongly supports our aim of building and maintaining solid levels of growth".

But responses to the latest Business Herald business leaders survey, conducted over the weekend, were almost unanimous in rejecting that claim.

Asked whether "this Budget signals that the Government is serious about growing the economy" all but one of the senior business leaders answered "No".

Even the respondent who thought the Budget was serious about growth gave it only a slightly positive rating and bemoaned the absence of moves on company tax and research and development.

Business leaders saw the Budget's greatest strengths as its fiscal discipline and lack of surprises. Several praised its "prudence", "the fact that we have a surplus" and that it was "reasonably fiscally contained".

Others were impressed by its "no surprises" approach, "predictability", the fact that it was "business as usual" and "general consistency".

But one respondent answered the question about the Budget's greatest strength with a caustic, "None".

The biggest weakness identified was the absence of any measures to boost the rate of economic growth.

One respondent said the Budget had "as usual failed to address any issues associated with growth or many of the social issues such as welfare dependency".

Another said the biggest failing was "the lack of focus on growth".

Yet another said there was still "no clear direction of where the Government is taking the country over the next 5-to-10 years".

Several expressed disappointment at the failure to use the surplus to lower tax rates and some referred particularly to the need for tax relief for businesses.

Overall, on a 0-to-10 scale (where 0 is highly negative, 5 neutral and 10 highly positive), the impact of the Budget on business scored a somewhat negative 4.1.

Michael Cullen's performance as Finance Minister rated a faintly more enthusiastic 4.9.

One, who gave him a 6, said this was "on the grounds that other Labour finance people might not have been as fiscally conservative".

But another, while giving a neutral 5, asked, "What has he done?"

The survey also revealed increasing gloom about the economic environment and the Government's role in the economy.

The impact of Government policy on business drew a strongly negative 3.2 - the question's second lowest since the survey began.

The impact of the Reserve Bank on business was assessed at a rather more positive 4.8 which is, however, still one of the lowest levels recorded.

Business conditions at present were rated at a record low of 4.2.

Conditions 12 months out were given 4 - their lowest rating yet.

Nevertheless, most respondents were fairly optimistic about their own plans, with the likelihood of expansion in the next 12 months being right on the survey average, 7.

Marks out of 10

Budget 4.1

Finance minister 4.9

Economy now 4.2

Economy in 12 months 4.0

Govt economic policy 3.2

Reserve Bank 4.8