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Budget Holds Little Hope For Business

Small and medium sized businesses have every reason to be concerned about their prospects in the run-up to this year's Budget, Opposition Leader Jenny Shipley said during a pre-Budget speech in Auckland this morning.

"The Labour-Alliance Government's policies have provided little relief to business, and all of the signs are the Budget will do nothing to change that. International confidence and economic performance are steadily declining and forecast growth rates are being revised downwards.

"Householders are faring little better, with the latest annual Food Price Index showing a 6 percent rise in costs, the highest since 1991. Consumers are clearly losing spending power and confidence, as they come under real pressure.

"The Government's approach is ankle-tapping New Zealand. There are major issues which New Zealand businesses should be deeply concerned about:

* The Government's failure to expose the Budget blowout until the last moment has created a real sense of disquiet about their ability to manage the economy.

* The Government's pro-development rhetoric has failed to materialise, with no advances made on the Resource Management Act. On the contrary, the Minister of Conservation is now interfering in a major development on the Coromandel.

* Their Budget, even with its blowout, is under high fiscal pressure. This was evidenced by the Government's inability to front up with $14 million to remove the inequity they created over Community Services Card entitlement for low-income workers. A further example is their confused stance on paid parental leave, which despite Laila Harre's rhetoric is nowhere near being resolved.

* The Government is effectively allowing Michael Cullen to cheat on his Budget figures. The Budget blowout will be bigger than the stated $270 million because, for example, hospitals are being allowed to slip back into deficit funding. In the short term this will be hidden as a capital item, but inevitably it will impact on operating expenditure.

* Continued uncertainty over the monster Superannuation Fund remains unaddressed, with no sign the scheme will prove either economically robust or politically durable.

"The Government has done nothing to instill confidence into those operating small and medium sized businesses. They have succeeded in raising expectations, but it seems sure those expectations will not be met," Jenny Shipley said.

Ends


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