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Budget 2011/2012 strikes the necessary chord

Media release

Friday May 20 2011


Budget 2011/2012 strikes the necessary chord

CPA Australia would have welcomed more assistance to small business

The 2011 Budget is tough but strikes the necessary balance between assisting the nation’s economic recovery and returning to surplus, CPA Australia has said.

CPA Australia New Zealand Division President David Searle welcomed the Budget’s key aims and said the Government faced a difficult balancing act.

“On the whole this budget strikes the right balance between fiscal responsibility and necessary outlays to assist those parts of the economy and the community who need it,” he said.

“The aim to return to surplus by 2014/15, establishing the Canterbury Earthquake Recovery Fund, investment in major infrastructure and planned savings through greater efficiencies in the public service highlight the broad scope of this Budget.

“What these initiatives also highlight are the range of challenges that governments face in a volatile global economic climate.

“New Zealand faces a dual challenge. This being a post-GFC recovery which remains patchy, and the economic and social after-effects of natural disaster”

Initiatives welcomed by CPA Australia in the Budget include:

· A return to surplus by 2014/15 and commitment to capping and then reducing national debt as a percentage of GDP;

· Investment in major infrastructure, including rail, broadband and health care facilities;

· Better targeting of the ‘Working for Families’ program to those most in need;

· Extending the mixed state/private ownership model to four energy companies that are currently entirely state-owned; and

· Initiatives to encourage increased investment and savings including the creation of Kiwi Bonds to help generate funds for the rebuilding of Christchurch.

Mr Searle said more direct assistance to the small business sector would also have been welcome.

“Small business is after all a key driver of the economy and this sector’s ongoing health will greatly influence broader sustainable economic growth,” he said.

Mr Searle also noted that the Budget did not provide any incentives to encourage innovation.

“We need to stimulate the economy in a way that goes beyond short term gains to creating long-term sustainable growth. Targeted research and development incentives for innovative entrepreneurial initiatives would enable New Zealand to keep up with the rest of the world.”


Mr Searle commented that in general, “The volatility witnessed over the past few years – both in capital markets and the broader economy, as well as nature’s volatility – highlight how critical it is that governments do their best to mitigate against future shocks of any kind.”


“This Budget is to be commended for, on the whole, managing this difficult balancing act.”

ENDS

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