Media statement Thursday, May 28, 2009

Budget responsible, back to basics

The financial aspects of today's Budget are straightforward and responsible, the Employers & Manufacturers Association (Northern) says.

"The moves to reel in $2 billion in government's operating costs were well telegraphed, and long overdue," said Alasdair Thompson, EMA's chief executive.

"Business accepts the tax cuts scheduled for 2010 and 2011 had to be deferred, and most New Zealanders will acknowledge that borrowing to fund the superannuation scheme makes no sense.

"Business welcomes the assurances that the regulatory reviews of the RMA, the Building Act, telecommunications and electricity will be aimed at lifting the nation's productivity.

"The plans for the extra investment in transport, housing, electricity supply, broadband and education are solid, and business applauds them.

"The CRI's and universities will benefit from the extra $321 million for science dropped from the $700 million Fast Forward fund and the withdrawal of the tax credits for R&D, though it won't make up for them.

"However the Budget pays insufficient attention to the structural issues facing New Zealand, such as:

* High marginal personal income and company tax rates driving away mobile people and investment.

* Our dependence on foreign savings to maintain our lifestyle - 40 per cent of our private debt is funded by foreigners, with 75 per cent of bank loans made here in the last three years borrowed from offshore.

* New Zealanders living much longer and needing to support themselves for longer before becoming eligible for superannuation.

* Addressing our current account deficit - this can only be attacked by exporting more, more savings at home and less spending on imports.

"There was no signal from the Budget how Government proposed to lift private savings or what plan there may be for getting people to be responsible for their own incomes beyond 65 years of age.

"The Budget appears to be scene setting for moves on these deep rooted issues. They can't be ignored.

"Let's not waste the crisis."

ends

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