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No Surprises in the DEFU

18 December 2001 PR189/01
FFNZ: No Surprises in the DEFU but low forecast growth is of concern

A significant drop in forecast growth, lower than expected budget surpluses and higher government borrowing were largely predicted in the December Economic Fiscal Update (DEFU) released today, but are nevertheless concerning, says Federated Farmers President Alistair Polson.

“While some of the downgrade can be directly attributed to the weaker world economic outlook, a small isolated country like New Zealand must further promote a competitive regulatory framework and lower tax burdens if our international competitiveness is to improve,” Mr Polson said.

"The outlook for the agricultural sector remains reasonably buoyant, with declining prices as a result of lower world growth predicted to be largely offset by factors such as a favourable exchange rate and steady demand for New Zealand animal products.

"Nevertheless, it is important that the New Zealand Government does not use the current favourable circumstances to sit on its hands, or indeed impose greater costs on the agricultural sector through inappropriate regulations and taxes.

Mr Polson said that given the Government’s significant involvement in the economy it is important that decisions which involve regulatory interventions are well thought through in a systematic way to ensure that unnecessary costs are not placed on the economy.

“While the Government is to be commended for establishing the Ministerial Panel on Business Compliance Costs earlier this year, and for its response released today, there is a strong case for a more systematic approach to be taken towards the implementation of all regulatory interventions, to ensure that, not only are compliance costs adequately considered, but that the wider economic and social costs are adequately assessed.”

"There is a strong case to be made for a Regulatory Responsibility Act which could provide for a sound set of principles for Government and their departments when deciding whether or not to regulate, as opposed to other alternative mechanisms to achieve an objective. A Regulatory Responsibility Act would be complementary to the Fiscal Responsibility Act and Reserve Bank Act," concluded Mr Polson.

ENDS

For further information: Alistair Polson (04) 473 7269 or 025 370 085 John Pask (04) 473 7269

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