Media Release Thursday, May 24th, 2001

All the right words for growth...

The Budget used all the right words in support of business growth though still not enough is being done to lift the country to a higher level of economic performance, says the Employers & Manufacturers Association (Northern).

"It's good to hear Government expressing a clear direction for economic development, " said Alasdair Thompson, EMA's chief executive.

"But if we are to regain the standards of living we enjoyed in the past, and to match those of most other countries in the OECD, even more emphasis has to go on wealth creation.

"Our assessment of the Budget against our three priority areas is as follows:

* Education - the Budget reserves over half of all new spending to education. This matches our ambitions for new learning options. We hoped to see programmes introduced to increase the number of students studying maths, science and engineering but Government hasn't addressed this need.

* Releasing the power of R&D spending in the private sector. The Budget scores a very big tick with business with the announcement of the new $100 million Venture Capital Fund leveraging off the assets held in the crown research institutes and state owned enterprises.

* Promoting local and foreign investment. Nothing in the Budget addresses this. There was no announcement about bettering Australia's company tax rate of 30 per cent. There's no sense of urgency to retain investment in New Zealand, and this omission sits strangely at odds with the rhetoric elsewhere in support of enterprise development.

"Also, while the double taxation of dividends persists between Australian and New Zealand, New Zealand will always be the loser.

"The Budget overall is tight to the extent that there is a high risk that spending levels will be exceeded, as occurred last year.

"The assumptions of taxation income on which it is based have the economy growing 2.6 per cent over the next year, and 3.3 per cent the year after, largely as a result of export growth of 4.2 per cent in 2002 and 5.8 per cent the following year.

"These are brave projections since the current year's growth of 2.3 per cent growth was achieved with a 5.5 per cent lift in exports at a time when exchange rates were moving very favourably for exporting."

Further comment: Alasdair Thompson tel 09 367 0911 (b) 09 303 3951 (h) 025 982 024

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