Government must focus on enhancing NZ's Growth Potential

If the Government is serious about moving New Zealand back into the top half of the OECD it must provide a business environment that encourages investment, inspires confidence and does not penalise the productive sector, says Federated Farmers of New Zealand (Inc) President Tom Lambie.

In a submission to the Finance and Expenditure Select Committee on the Budget Policy Statement 2003 Mr Lambie said the Government could not take credit for the convergence of low exchange rates, relatively low interest rates, favourable climatic conditions, and buoyant international prices, which contributed towards significantly improved commodity prices.

"Many of these "positives" have largely evaporated over recent months, which is reflected in export prices and business confidence. Combined with continued global economic and political uncertainty New Zealand's current growth rates could be considered "as good as it gets".

"With growth rates set to peak at around 4% per annum in the year to March 2003, this is clearly not enough to met the Government's goal of moving New Zealand back into the top half of the OECD in terms of per capita income.

"Increased regulatory burdens on business, such as the Government's decision to ratify the Kyoto Protocol on climate change, increased ACC levies decreed by a state monopoly, and the recently enacted Local Government Act are no way conducive to providing a more competitive and prosperous business sector.

"By providing farmers, businesses and entrepreneurs with an appropriate legal and regulatory environment, they will determine, via market signals, what needs to be produced. The Government will then be able to place its focus on vital public good activities such as law and order.

In its submission the Federation supported the introduction of a Regulatory Responsibility Act and the review of the Fiscal Responsibility Act.

"The Government must focus on enhancing New Zealand's growth potential by ensuring that all policy interventions are in response to clearly defined cases of market failure."

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