A budget of hand outs not hand ups
Today's budget is all about re-distributing the tax gains made during the best spell of growth we've had since the
1960's, the Employers & Manufacturers Association (Northern) says.
"Cullen's $10-15 billion spend up over the next three years, plus the extra billions since 2000 would have looked pretty
sick without the last lucky four year burst of growth," said Alasdair Thompson, EMA's chief executive.
"Government surpluses should have been returned to those who earned them through tax cuts, or invested to lift New
Zealand's outlook onto a higher plane and sustain it there.
"We certainly need to see much more investment going into infrastructure such as new roads, rail, electricity
transmission, generation, potable water supply and waste water treatment.
"Instead Dr Cullen continues to patronize the voters by re-distributing the surpluses they have earned.
"While we applaud the intentions of the Budget to ensure low and middle income families get more income, we deplore the
patronizing way this is being achieved.
"Business is confident lower income earners would prefer higher incomes from their own employment and entrepreneurship
than from tax payer funded handouts, while their own ability to invest and create growth for themselves is reduced.
"Nevertheless we welcome the efforts to get more people off benefits and back into the workforce, including the extra
day care benefits, and the steps taken for people to profit by getting work rather than rely on benefits.
"But Government does not create wealth or give out anything of its own making, and we are alarmed by the thought that to
implement the new provisions an army of new bureaucrats will be required.
"We would much prefer to see far more of the surpluses invested in infrastructure, especially roading, to sustain the
economy's growth.
"The greatest opportunity in decades to restore our infrastructure back to historical levels is being squandered.
"Daily and unpredictable traffic congestion in Auckland and annual power shortages are ample evidence of the
underinvestment in infrastructure.
"Auckland's roading deficit is estimated to be costing about 1% of the nation's GDP every year. More rapid road building
in Auckland would boost growth of this quantum.
"The underinvestment in electricity generation and transmission is alarming, and discouraging investment in new
projects.
"Government had plenty of scope to double spending on capital projects to 2 - 2.5% of GDP phased in over five years to
raise this type of investment back to historical levels.
"In fact we needed cuts to the company tax rate as well to lift New Zealand's private sector investment in capital plant
and skills, through the retained earnings that that would allow.
"New Zealand's capital to output ratio declined 10% in the decade to 1997 and is likely to have worsened since.
"Capital stock has not kept pace with GDP growth. In 1992 our total capital stock exceeded 200% of GDP. By 1997 it had
fallen to 180% of GDP by 1997.
"As a consequence our productivity has fallen well behind Australia's since 1975, largely due to our failure to invest
in capital infrastructure and productive plant.
The consequences overall are that New Zealand's competitive advantage has been eroded. The Budget is a good time to
address this, so its disappointing Cullen chose not to."