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Heather Roy: Budget 2010

Budget 2010

Hon Heather Roy, ACT Deputy Leader
Saturday, May 12 2010

The Budget is one of the most important events of the political calendar - second only to the General Election. Pre-Budget Day speculation and commentary on the day itself never fails to propel the country's pundits, lobby groups and industries into a stir. Thursday just gone was no exception as Finance Minister Bill English delivered his second Budget since the National-led Government took office.

The general feeling is that Mr English delivered a good Budget. As with any Budget, there are highlights, low-lights, winners and losers. But Budget 2010 received a five out of 10 from ACT Finance Spokesman Sir Roger Douglas - not three out of 10 as mischievously proposed by cartoonist Tom Scott ( http://www.stuff.co.nz/blogs/opinion/cartoons/1251886/Tom-Scott) - and around 6.5 out of 10 from NZ Business Roundtable Executive Director Roger Kerr.

The 'Dominion Post' likened this week's Budget to an "old-fashioned lolly scramble" and, while the simile may not be completely accurate, there is no denying that Budget 2010 was more generous than had been anticipated.

One commentator said earlier in the week that the Budget would be about tax, tax and tax. He was absolutely right and these measures have gone down pretty well with Kiwis - especially the tax cuts. Most importantly Budget 2010 reduces the rate of Company Tax to 28 percent - lower than the 30 percent rate in Australia. The 28 cent rate will be effective here come April 1 2011, while across the Tasman a 28 percent rate is on the agenda but won't be in place until a year later than ours.

Although this is still higher than ACT would like - our policy is to reduce Company Tax to 25 percent - having a lower rate than Australia is a positive step forward. It provides better incentives for business to work hard and succeed and, inevitably, make a greater contribution to boosting productivity and economic growth. It also gives us a competitive advantage and may encourage businesses to consider moving to New Zealand.

The public is also pleased with the Income Tax cuts that will see the average New Zealand family better off by around $25 per week. The top rate of tax will be 33 percent, down from 38 percent, for those earning over $70,000. For those earning $48,001-$70,000, the rate drops from 33 to 30 percent, and the rate for those earning $14,001-$48,000 drops from 21-17.5 percent. The bottom rate - for those earning $14,000 and under - drops to 10.5 percent. These changes all take effect on October 1.

The price for the tax cuts is an increase in GST to 15 percent. ACT believes this was unnecessary had the Government been prepared to tackle expenditure responsibly. In his discussion document 'Budget 2010: Combating Government Waste' ( http://www.act.org.nz/news/budget-2010-combating-government-waste), Sir Roger this week identified over $3.1 billion in wasted Government spending. If this had been cut, the Government it would be able to afford tax cuts and GST could have stayed at 12.5 percent.

Unfortunately the Government isn't cutting spending - in fact, it is set to spend more. This year Government expenditure has risen more than nine percent - from $67.4 billion to over $70 billion - and Budget 2010 shows that Government expenditure will be three-and-a-half times the rate of inflation.

Despite this, however, Mr English has delivered a far more positive and 'user-friendly' Budget than he did last year - when belt-tightening was the message of the day, with debt and deficit forecasts looking very pessimistic, and tax cuts looked to be nothing more than a pipedream. Treasury is now forecasting economic growth of 3.2 percent for the year to next March, a good improvement.

The Government's rebalancing of the tax system has improved incentives for New Zealanders to work hard, get ahead, save and invest - and made us more competitive with Australia. Although it appears that National is not going to provide any kind of 'big bang' when it comes to the economy, Budget 2010 gives us a foundation to work from. The Government is still some way from putting the economy on a strong and balanced growth path, but Budget 2010 is step in the right direction.

Lest We Forget - The Royal New Zealand Army Medical Corps
On Thursday I travelled to Linton Military Camp in Palmerston North for a special ceremony at which the Royal New Zealand Army Medical Corps (RNZAMC) was presented with a royal banner after 102 years of existence.

The medics put on a spectacular display at the Banner Parade and I was highly impressed by their superb slow marching - as was His Royal Highness Prince Richard, the Duke of Gloucester, who presented the Banner in his role as Colonel-in-Chief of the RNZMCA.

Army medics have been an important part of the New Zealand Army since their formation on May 7 1908. Originally established as the New Zealand Medical Corps, the regiment was granted a Royal Warrant in 1947 and was renamed the RNZAMC.

Today the Corps is made up of medics who are specialists in pre-hospital emergency and primary healthcare, health practitioners - including medical officers, laboratory scientists, pharmacists, and radiographers - and para-medical staff who specialise in environment health. There are also specialist commanders who are expert in managing health operation.

RNZAMC personnel can be found on almost all operational deployments and continue to uphold the Corps' illustrious history and reputation for providing New Zealand Defence Force personnel with the highest quality care.

The Royal Banner the Corps received this week is a sign to which the RNZMCA can acknowledge their loyalty and duty to Sovereign and country, while also honouring the work of those medics who came before them. It will inspire them to continue to uphold their proud tradition of courage, commitment, comradeship and integrity - a reputation more than 100 years in the making.

ENDS

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