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Rhetoric does not match the reality

Rhetoric does not match the reality

The 2010 Budget Speech had plenty of rhetoric on the importance of the real economy, the export sector, production, jobs and savings, but the numbers did not match. Reductions in corporate tax and changing the rules for Loss Attributing Qualifying Companies as they apply to property investors will be helpful, but more needs to be done say the New Zealand Manufacturers and Exporters Association (NZMEA). The Institute for Management Development’s (IMD) competitiveness rankings released yesterday showed New Zealand continuing to slide due to poor export performance and weak capital markets. This Budget does little to turn this around.

NZMEA Chief Executive John Walley says, “The changes to property taxation, the corporate tax rate and GST go some way towards a lower and broader tax take but they fall a long way short of the options offered by the Tax Working Group.”

“The removal of accelerated depreciation loading for plant and equipment will be detrimental to business investment. That change, combined with the watered down research and development provisions, leaves firms with less incentive to invest in productivity growth and jobs.”

“New Zealand is an export exposed economy; our exports as a percentage of GDP are much higher than the OECD average and yet we rank 50th out of 54 in the IMD ranking for export performance. This is a huge problem that cannot be fixed by fiddling and tinkering around the edges,” says Mr Walley.

“The initiatives announced by the Government will have some impact on the productive sector but this is only a start. Policy focus must shift from reallocating existing resources to growing the tradeable economy if we are to reverse our economic slide.”

ENDS

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