More picking winners instead of rewarding winning
Media Release 22 May 2008.
Budget 2008 – ‘more picking winners’ instead of rewarding winning behaviour’.
The 2008 Budget has delivered very little towards lifting industrial performance says the New Zealand Manufacturers and Exporters Association (NZMEA).
“Manufacturers and Exporters did not expect much from this Budget and although threshold changes might reduce compliance costs, the immediate adverse impact on exchange rates said it all to exporters”, says Chief Executive John Walley.
“We are pleased to see the R&D tax credit in effect, that encourages winning behaviour, but the Government persists with its policy of ‘picking winners’ rather than widening the behaviour based approach”.
“The money allocated into programmes such as the Fast Forward Fund, Better by Design and the $24 million for high-tech research platform is not sufficient to offset the damage to our external sector that is being caused by high interest rates causing speculative pressure on exchange rates. We share the Government’s hope that the tax cuts and the heavy social spend will not be inflationary – however the markets see it otherwise and this will adversely impact returns to exporters”.
“A glance at the exchange rate screens will be sufficient bad news for exporters, as what happens in seconds can wipe out many months of effort. If we want to see exports grow, the external sector will need much more policy consideration”.
“The change to the tax thresholds is the Government playing catch up on fiscal drag. Wages have risen in recent years, but so too the Government’s tax collections. So while tax cuts might be seen by some as overdue, more could have been done to help stem the loss of New Zealand’s industrial base”.
“Nothing changes if nothing changes, expect to see more job losses as current trends continue”.