Government Throws Out Sea Anchor

Statement made by Paul Dunne, KPMG

Budget 2009 throws a sea anchor to stabilise an economy floating on a very stormy economic sea. However, more is required to put the economy back on course toward a fiscally sustainable position.

The deferral of tax cuts and suspension of contributions to the New Zealand Superannuation Fund were anticipated by many, but these are just preliminary steps required to commence moving down the Minister of Finance’s touted ‘Road to Recovery’.

The Government seems to be buying time to enable it to fully consider its revenue and spending options. Budget 2009 documents make it clear that a number of initiatives are underway, but still in planning stage.

The recently established Tax Working Group, of which KPMG is part, may assist Government’s thinking in relation to options around the tax system. However, tax revenue is but one side of the equation. Spending requires focus to demonstrate it is efficient and effective.

Taxpayers including large and small businesses fund the expenditure through taxes and charges, and we need it to be clear that those taxes are both necessary and used productively.

ENDS

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