CEOs want more action from Cullen

Boldness - that's the quality the many chief executives want Michael Cullen to demonstrate as he fronts the Government's economic transformation agenda.

More than 90 per cent reckon Cullen's recent Budget measures will not of themselves ensure NZ's metamorphosis into an internationally competitive business destination.

The CEOs believe other policies - particularly corporate and personal tax cuts - will have a bigger impact on NZ's international competitiveness and help attract and retain vital human capital.

But there are concerns at the expansion of welfarism and the Nanny State - and the capacity of NZ's taxpayers to ultimately pay the bills.

Cullen's decision to front-foot a business taxation reform agenda to make NZ more competitive against Australia has been taken to mean that he will cut the top company rate to 30 cents from April 1, 2008. At last year's election, National's personal tax cuts package was preferred by 92 per cent of chief executives over Labour's tax relief measures. National finance spokesman John Key was the darling of that campaign.

Only one-third of CEOs said then that the corporate tax should be cut ahead of personal rates.

Now Cullen is stealing some of Key's thunder. Personal tax cuts are not formally on Cullen's agenda - yet. But 90 per cent of CEOs say the corporate and personal rates will need to be aligned to avert tax leakage if the company rate is cut to 30 cents. Sixty-five per cent say they will pay staff more when the company rate is cut. Nearly 90 per cent say they will also retain earnings to invest in and grow their companies.

Among other major ingredients that COEs say are missing from the economic transformation agenda are energy security and a compulsory superannuation savings scheme. "If we are not careful, we will find ourselves unable to compete globally due to high domestic energy costs," said Andrew Ferrier, CEO of Fonterra, NZ's largest exporter.

Seventy-six per cent say the market model has not worked to deliver energy (electricity) supply, and 84 per cent believe it's time for NZ to debate the pros and cons of nuclear energy.

One in five CEOs put compulsory savings on their recommendations. "New Zealand could build a big capital base and reduce its reliance on other savings if it established a compulsory superannuation scheme," said Westpac CEO Ann Sherry.

The Government's decision to boost funds to complete major roading projects is a plus. Nearly 60 per cent say it will make a difference to their business costs. But 93 per cent say public/private sector partnerships should be part of the mix.

Other areas like Telecom's broadband monopoly, a new state-owned enterprises agenda, infrastructure funding and possible change to the competition laws are outlined in the adjoining story.

Missing ingredients:

* Professional firm CEO: "The government needs to appreciate that tax, research and development, and immigration policies need to be globally competitive if NZ is to transform its economy to achieve the sustainably higher growth rates needed to grow per capita incomes. Without meaningful change, economic transformation is just rhetoric."

* Entertainment industry CEO: "An environment which recognises and rewards entrepreneurship and enterprise. Recognition of the reality that we are slipping behind every other country."

* Property CEO: "Stop NZ becoming a welfare state."

* Construction services CEO: "No common, communicated aspiration."

The loss of skilled staff to Australia - despite staff retention measures - is another concern for nearly 80 per cent of CEOs.

* Wellington securities market player: "Australia will continue to target New Zealanders - we need to understand this and target keeping our best rather than only focussing on safety nets."

* Media CEO: "Two years ago the NZ dollar/Australian exchange rate difference was matched by the income tax differential. Now there are better exchange rates, salary, income, tax and superannuation benefits for working in Australia."