28 May 2009
Budget –spending cuts yes, but what about growth?
The budget released today contains little in terms of changes to support any real economic development says the New
Zealand Manufacturers and Exporters Association (NZMEA). There was some tinkering around the edges with some new funding
allocated, but no attempt has been made to tackle the fundamental imbalances in our economic framework.
NZMEA Chief Executive John Walley says, “The budget made some attempt to curtail Government spending, but there is no
provision to promote real economic growth.”
“The reasons we have been in a recession for a year are clear. Our tax system promotes asset bubbles rather than
productive activity and our monetary policy framework creates overvalued exchange rates and high interest rates. Neither
of these problems have been addressed.”
“Incentives to invest in Research and Development and productive assets such as equipment and machinery are lacking. The
Research and Development Tax Credit was cancelled to fund tax cuts elsewhere; every other developed nation recognises
the economic leverage of encouraging firms to invest in development and new technology, our Government should follow
suit.”
“Initiatives such as the Tax Working Group set up to review our tax framework offer some hope that we may see some
changes, but progress is much too slow. If we are to see more investment in export activity the continued cycle of
overvalued exchange rates and high interest rates must come to an end.”
ENDS