Govt must maintain business-friendly environment

For immediate release
10 September 2009
Media Release:

Government must maintain business-friendly environment

“The Government must ensure New Zealand continues its reputation as a good place to do business”, says Steven Bailey, the New Zealand Institute of Chartered Accountants’ Director, Government Relations.

For the fourth year in a row, New Zealand has been ranked second as the easiest country in which to do business in a World Bank survey. The report ranks 183 countries based on ten indicators that measure the time and cost of government requirements in starting, operating and closing a business, trading across borders and paying taxes.

Singapore was the leader in the survey followed by New Zealand, Hong Kong and the United States.

Mr Bailey said as well as remaining competitive internationally, we must retain an operating environment which is appropriate to New Zealand.

“Overseas investors are interested in the quality of our courts, liquidity of our markets, our exchange rate risk and what drives that risk, the quality of our labour and corporate management. They are also interested in the state of our infrastructure and its ability to accommodate future economic growth.

“We know that investment sites listing New Zealand are more likely to identify the absence of excessive bureaucracy and red tape as a comparative advantage to investing here.

“New Zealand is a good place to do business – the political environment is relatively stable, property rights are well protected, contracts enforced, and corruption in government is not an issue investors need be concerned with”, said Mr Bailey

Mr Bailey said this report also needs to be examined in a wider context.

“Approximately 90 percent of New Zealand businesses employ five or fewer people and this survey is based on organisations employing 60 or more. In this sense the results are not necessarily reflective of the compliance costs being faced by many New Zealand small businesses.”

“There are a number of initiatives that the Government needs to put in place to maintain our reputation, attract offshore investment and implement reform in the small business environment, particularly taxation issues.

“We have communicated our seven broad policy recommendations to the Government for our ideal environment. If we can achieve these we will continue to rank well internationally as a place to do business.” said Mr Bailey.

Seven broad policy initiatives to a business-friendly environment:

1. A quality of regulation package to drive improvements in the quality of business and other regulation.

2. Reforms to New Zealand’s fiscal constitution that aim to curb the growth in public spending, and raise the efficiency and effectiveness of government programmes.

3. A credible low-inflation policy supported by a prudent fiscal position.

4. An infrastructure policy that applies a broader range of infrastructure delivery models (such as public-private-partnerships), private ownership and effective competition in all contestable market segments, and the regulation of infrastructure that is forward-looking, investment promoting and provides certainty for investors.

5. A well functioning labour market that matches workers skills to the most productive use of those skills, allows for many types of employment relationships, and where the barriers to employment and retention of workers are kept to a minimum.

6. A low cost tax system that raises the necessary revenue for the Government at the lowest rates possible spread across a broad tax base. This approach should keep the cost of taxation to a minimum; including, the compliance costs on taxpayers in meeting tax obligations and the economic costs arising from distortions to resource use and production decisions.

7. Policy measures that improve the governance, accountability and efficiency and effectiveness outcomes from international standard setting bodies.

ENDS

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