Still waiting on real changes - 24 May

The Budget has brought more helpful tweaking but still not the step change needed to turn around the economy say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive John Walley says, “The more fundamental problems, such as a lack of export growth, have once again gone ignored. Generally the right sentiments are there but the action is simply too timid.”

“The growth forecasts have been scaled back since last Budget but there is still some downside in the Treasury’s numbers. The Treasury’s numbers have been generally optimistic over the past few years so if growth doesn’t live up to forecasts, any surplus forecast will evaporate.”

“Initiatives such as research and development spending, youth training and cracking down on tax avoidance are commendable (although research and development spending is far better directed through a tax credit rather than through a layer of bureaucrats), but are not enough on their own. The Government must also address the big picture issues such as the capital gains or land tax issue to have a really broadly based tax take.”

“Overseas merchandise trade statistics released today showed exports down 17 percent on April last year – clearly what we have is not working, and we need far stronger elaborate exports to support the performance in primary sector. The increasing current account deficit projections should be keeping us all awake at night.”

“In short, we really need is a mechanism to manage our exchange rate, an even more balanced tax system and incentives for productive investment,” says Mr Walley.

“Unfortunately we are not really that much closer to getting those fundamentals right.”

ends

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