National Party - No Growth Budget 2003
A special budget newsletter from National's Parliamentary Team Check out http://www.national.org.nz to find out more about the Budget, or to get in touch with us.
This Budget is a no growth Budget. Stimulated by a weak New Zealand dollar, high commodity prices and a strong surge in net migration, the economy was very buoyant over the last two years and produced a surplus of $4 billion in today's Budget. The bad news is that economic growth will slow sharply over the next year - from a growth rate of nearly 4½% in 2002 down to 2.2% this year - as the economy is hit by the impact of a rising exchange rate, SARS, drought conditions and electricity shortages.
What is of even more concern is that the Treasury sees nothing on the horizon that will lift New Zealand's economic growth rate much above 2% in the next decade! And that is simply too slow a growth rate to narrow the large gap in living standards between New Zealand and Australia that emerged over the seventies and eighties.
The Budget shows that economic growth last year was the best it will be - despite all the Government's growth-improving rhetoric. Helen Clark herself has acknowledged the Government's failure to increase New Zealand's sustainable economic growth rate and abandoned her Government's pledge to lift New Zealand back into the top half of the OECD in per capita income terms by 2011.
The fiscal numbers.....
With the surplus reaching $4 billion this year and forecast to reach $6 billion in 2006/07, the Government is overtaxing families and businesses to pay for welfare dependency, politically correct programmes and predictable failure in education. Cullen has been congratulating himself on his 'fiscal prudence'. However, during the Government's first term Cullen broke his own fiscal cap and has since abandoned the cap completely! The stage has been set for a big spend-up. Indeed, Cullen has already signalled a pre-election spend-up in Budget 2004. Undoubtedly the fiscal floodgates will open wide as he succumbs to pressure from his spending-eager Ministers.
Despite the fanfare for many of the announcements of new spending on political hotspots, new Government spending this Budget is relatively modest. Most of the initiatives are spread over the next four years, and much of the new spending had been announced before the Budget. None of the new initiatives will improve New Zealand's sustainable growth rate.
There is nothing in the Budget to address the crisis in roading or the energy sector.
While the Government has tinkered with tax rules, there is nothing to address the bigger issue that New Zealand has one of the highest company tax rates in the Asia-Pacific.
We have serious concerns about the $6.5 million allocated to a Treaty of Waitangi education programme by a Government that believes the Treaty gives Maori special rights other New Zealanders don't have.
Our plan for growth versus their plan.....
New Zealanders' standard of living remains significantly lower than that of the average Australian. This means that, on average, Australians can enjoy better-paid jobs, better schools and universities, shorter hospital waiting lists, better roads, and more of all the other good things in life. Therefore, the number one priority task for the Government should be to do everything possible to increase New Zealand's sustainable economic growth rate.
And, sadly, this is where the present Government has totally failed. In fact, it has done the opposite. The Government has been creating additional obstacles to growth with almost every new policy. The amended Resource Management Act, Health and Safety in Employment legislation, and the Local Government Act, among others, have all created additional costs and disincentives for businesses to grow. The Government has further discouraged those with initiative and enterprise by keeping the company tax rate at a rate that is one of the highest in the Asia-Pacific region and by raising the top personal tax rate from 33% to 39%. It has created uncertainty for power companies and users by ratifying the Kyoto Protocol before most of our major trading partners. And it has totally failed to deal with the severe and costly inadequacies of our roading and electricity infrastructure.
National has a common sense, comprehensive and credible plan to lift New Zealand's sustainable growth rate.
* National will deal to excessive regulation and associated compliance costs. National will fix the major regulatory bottlenecks.
* National will lower taxes to encourage and reward enterprise and investment. We will move the company tax rate from 33% to 30% and the top personal rate in the same direction.
* National would remove the legislative barriers that have stifled new investment in electricity generation over the last four years to ensure plenty of energy generation for the future.
* National will focus on getting better value for money in education, by increasing choice, devolving more responsibility to schools, and insisting on standards.
* National will ensure that Government investment is consistent with the objective of higher growth. Alleviating severe traffic congestion in Auckland and Tauranga is a key priority.
* National would redesign our welfare system to move away from a culture of dependency, and to support those who want to work.
Too many New Zealanders are trying to live on incomes that are too low. Growth is the best hope for lifting the living standards of all New Zealanders, and only a National Government will be successful in lifting New Zealand's sustainable growth rate.