Australian Budget threatens NZ competitiveness

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

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