Media release
11 May 2005
Australian Budget threatens NZ competitiveness
The Australian Budget announced yesterday will cause more pressures in the New Zealand economy, says Business NZ Chief
Executive Phil O’Reilly.
“Across the board tax cuts at all income levels will make it more tempting for New Zealand workers to consider jumping
the ditch,” Mr O’Reilly said.
“Over the last year there’s been a net loss 330 of New Zealand citizens to Australia every week. That’s already too
many, but yesterday’s Budget decisions could mean more New Zealanders staying permanently in Australia.
“We know tax isn’t the only reason for Australia’s economic success – productivity is a key reason for Australian
growth, and the New Zealand Government is to be congratulated for its work aimed at increasing our productivity levels.
“But tax is extremely important. Over 80% of Australian taxpayers are now set to pay no more than 30% tax, and the
Australian Government has also dealt to bracket creep, raising the threshold at which the middle and top rates kick in.
“This is the pointy end of competitiveness. If we don’t get our tax levels right, we can’t compete effectively against
Australia for skills, investment and growth.
“Australia, like New Zealand, is maintaining good surpluses. But unlike New Zealand, Australia is doing the sensible
thing and reducing the tax burden. This is the third year in a row Australia has cut taxes. In the same period New
Zealand has seen only tax increases.
“Our Government has the opportunity to reduce the tax burden with next week’s Budget, and all political parties have the
opportunity to come up with meaningful tax policy in the run up to the election. New Zealand business will be watching
their decisions with interest.”
ENDS