John Key National Party Finance Spokesman

17 January 2006

Business confidence plummets - Govt must act

The Government needs to face reality and cut the red tape and tax burden on businesses, says National Finance spokesman John Key.

His call comes after two gloomy new economic surveys have shown just how pessimistic firms are becoming.

The NZIER's Quarterly Survey of Business Opinion out today shows firms are the most pessimistic they have been since 1986 - and seasonally adjusted they are the most despondent for 35 years - since 1970.

The December quarter survey showed a net 61% of firms expect business conditions to deteriorate over the next six months compared with 32% in the previous survey. After adjusting for seasonal variation, a net 71% are pessimistic compared to 34% in the last survey in September.

Yesterday another survey, the Grant Thornton International Business Owners Survey, had optimism amongst medium-sized New Zealand businesses falling below the international average for the first time in the three years the country's been included.

``These surveys are always about the trend, and the trend in all surveys now is bad,'' Mr Key says.

The NZIER survey also noted confidence was down in all regions of the country, and in all industry groups.

Mr Key says the Government should wake up to the fact that its business-unfriendly policies of the past six years have been masked by the good economic climate.

``Now things are looking much rougher, with an economy sailing into stormy waters.

``The Government urgently needs to give business confidence. It's about time it introduced policies to address the worrying trends of these surveys.''

Mr Key notes the Half Year Economic and Fiscal Update last month projected unemployment to rise to 4.1% in the 2007 March year, and further to 4.6% in the 2008 March year.

``Unless the Government has much greater economic vision, New Zealanders' jobs are on the line.''

ENDS

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