CEO comment May 2018

18 May 2018

Budget 2018:


From a business perspective there is little in the Budget regarding new announcements that will directly affect the business community in the short to medium term.


Of the announcements (either previously announced or during the Budget) that have direct relevance, we have identified the following:


There are positives for business from Budget 2018:


• The Government is keeping to its fiscal targets


• We are pleased that $1 billion over four years has been allocated for more Research and Development by Kiwi businesses. The aim is to raise R & D spending as a country by 50 percent, to 2 percent of GDP inside 10 years.

Economic Development:

• The 2018 budget formally establishes the Provincial Growth Fund to support growth in the regions.

• The Budget sets aside $100 million of new capital funding for the Green Investment Fund to kickstart investments in assets and technology to reduce carbon emissions.


Employment/training:

• We are pleased that the Government is funding an additional 800 places for the Limited Service Volunteer programme to improve the work-readiness of unemployed 18 to 25-year-olds, and targeting further investment to reduce the number of young people not in education, employment and training (NEETS)

• As previously announced, the Government will establish a tripartite forum with BusinessNZ and the Council of Trade Unions to advance projects that will improve business use of technology, create productive workplaces, improve skills and training and support a “just transition” to the rapidly changing world of work.


Other:

• New Zealand’s ability to respond to major cyber events and provide cyber threat intelligence is boosted by way of $3.9 million in new operating funding for the Computer Emergency Response Team (CERT)

• Public consultation will be launched in August on establishing a new institution (Independent Fiscal Institution – IFI) independent of Ministers that would provide the public with costings of political parties’ election promises in a credible and consistent way. This appears to be a positive move.


Concerns:

• The budget announces a new unit to oversee compliance with the RMA to improve consistency across councils. However, problems with the RMA are not solely or mainly caused by inconsistency across councils; they are deeper than this. Improving consistency of compliance by councils will help address some, but not all of the issues with resource management in NZ.

• The Budget is allowing full tax deductibility for racing industry bloodstock, however, this should be available to all industry, to increase investment in technology, capital and grow productivity.

Some further comments:

It is positive that economic growth is being shared around the community.


We would have liked to have seen a budget that paves the way for reduced tax for business over the short to medium term.

We would also like to see a move towards smaller, not larger government. Core crown expenses are currently 27.3% of GDP this year, and are expected to peak at 28.5% of GDP in 2019 before moderating slightly to reach 28% by 2022.


As always, any feedback is gratefully received.


Virginia Nicholls

CEO

Otago Southland Employers’ Association