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Business confidence welcome but fragile

Media release 24 January 2001

Business confidence welcome but fragile

"The rebound in business confidence is welcomed, but it's fragile," says Alasdair Thompson, Chief Executive, Employers & Manufacturers Association (Northern).

"A better measure than how business feels is how business is acting. Official figures show investment in New Zealand production capacity has been slipping for several years. Investment in manufacturing declined 22 per cent in the September quarter last year and although investment outlook is better, it remains modest and is yet to materialise.

"The Waterfront Workers Union's demarcation dispute with the Amalgamated Stevedores Union members does nothing for business confidence either.

"It was the Employment Relations Act, re-nationalisation of ACC, tax increases and Dr Cullen's first budget failing to deliver on Labour's promise to make R&D fully expendable that drove business confidence down last year.

"Recognising this, Dr Cullen last October invited business to suggest targeted policy approaches to promote business investment. Consequently, EMA surveyed business who said the tax system held the key to faster growth.

"For example, policies allowing faster plant and equipment depreciation rates, providing tax preferences to invest in education, training, R&D and exporting, all had strong support.

"74 per cent of firms rated the expensing of R&D as very important, while 49 per cent said it was important for government funded research agencies to be subsidised dollar for dollar if they contracted directly with private business. Twice as many SMEs than larger companies rated this investment incentive important.

"Also, the annual Employers Wage & Salary Survey clearly shows there is a benefit to individuals and our economy from lifting investment in skills and education, which New Zealand is lagging in.

"Without enough skilled and qualified workers, business cannot readily invest to create jobs dependent on such workers.

"Now we face a downturn in world trade growth, policies that promote business success in New Zealand are critical to our capitalising on the rebound in business confidence," concluded Mr Thompson.

Further comments: Alasdair Thompson Phone: Business 09 367 0911 Home 09 303 3951 Mobile 025 982 024

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