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Growth policies not looking good

Media release 11 February 2004

Growth policies not looking good

More growth-promoting policies are needed to get back into the top half of the OECD, Business NZ said in select committee today.

Addressing the Government's most recent Budget Policy Statement, Business NZ Chief Executive Simon Carlaw said the policies in the Statement would not provide enough growth to raise New Zealand living standards.

"Our research and regular comments from our members tell us policy changes in areas such as environment, transport and employment relations are inconsistent with current growth goals. In other areas such as the Resource Management Act, not enough is being done to hold down compliance costs that are hitting small and medium sized businesses hardest. The Government needs to ensure all policies in all areas have an explicit growth-promoting focus, and that all proposals are rigorously assessed on the impact they have on productivity and economic growth."

Mr Carlaw said Business NZ's method for monitoring whether New Zealand is on the right path towards increased economic growth, the Changing Gear Scorecard* found only one of the priorities with direct relevance to the BPS (reduction of gross sovereign-issued debt as a percentage of GDP) was heading in the right direction.

"Tax rates have not fallen and a recent study has found us to have the highest tax burden of any non-European OECD country**. Also, core crown expenses, including Superannuation Fund (NZSF) contributions, continue to rise as a percentage of GDP. "

He said the NZSF reduces options for both tax cuts and new expenditure while causing a growing sense of complacency among the public about future levels of Government provided retirement income.

"This, along with the apparent reluctance to amend growth-damaging policies, means stronger economic growth is becoming less and less achievable. The middle of 2004 was to be the time when the Government was to assess whether their growth policies were having a positive effect on economic growth. That is now only a few months away and the signs are not looking good."

*Changing Gear Scorecard:

**Tax Policy: Recent Trends and reforms in OECD Countries, OECD November 2003.

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