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After The Party Comes The Hangover

18 May 2006

After The Party Comes The Hangover

The enormous costs of last year's election promises and post election deal-making have come home to roost, said Don Nicolson, Vice President of Federated Farmers (Inc).

Mr Nicolson was commenting on a Budget in which - despite a large operating surplus this year - the Minister of Finance has predicted four years of cash deficits to be funded by increased borrowing.

"The economy is in a downturn and we are now paying the price for last year's spend up on interest free student loans, working for families, and other election promises. The spending spree has severely constrained options for fixing the key issues facing New Zealand - a slowing economy and diminishing competitiveness with Australia."

"We've had the party, now comes the hangover," Mr Nicolson said.

"The government should have used the Budget to re-prioritise its spending, reduce tax rates and make sure all its policies and programmes aim to improve competitiveness and boost productivity.

"There is now clear evidence that some government policies are working against competitiveness and productivity. As well we have high tax rates, continued problems with the RMA, and recent changes to the Holidays Act which are encouraging widespread abuse of sick leave and massive costs for the meat industry, reducing returns to farmers.

"Improving our national competitiveness and boosting productivity are the only sustainable ways to encourage the economic transformation needed to raise growth, improve everyone's incomes, and afford the social and environmental outcomes we all want.

"Agriculture is and will remain the key to our economic prosperity. Any economic agenda must recognise the influence of all government policies and programmes on the confidence to invest and other day-to-day decisions made by New Zealand's 80,000 farming businesses.

"Federated Farmers supports the large increase in transport funding and is pleased that over the next few years expenditure on transport will more than match revenue from road users. The Federation notes additional funding for research, science and technology but we still spend far less than Australia on primary sector research.

"Crown contributions to regional pest management strategies and more funding for biosecurity, and skills development are also supported, but we note that the Budget is silent on any package on rural broadband.

"Federated Farmers looks forward to working with the government as it embarks on its economic transformation efforts but it must focus on all issues, including the tough ones like tax, the RMA and employment legislation," said Mr Nicolson.

ENDS

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