Balanced and sustainable growth is top of the business wish list

By SIMON CARLAW*

A recent survey by Business New Zealand was not an easy ask - 58 questions requiring much thought, and taking up to an hour to complete - but 258 businesses responded, and some results were surprising.

Political parties have completed the same questionnaire - the comparison between these results and those from business will be fascinating, and will be unveiled at Business NZ's pre-election conference on July 17.

The Business Herald will publish the results of both surveys on July 22, a few days before the election.

The responses are being analysed now, and the results will doubtless provide insights into what lies behind both business confidence and business intentions.

The initial finding, however, is incontrovertible - balanced, sustainable growth is the big issue for business in this year's election - necessary for the survival or health of most businesses, and for the wellbeing of every New Zealander.

It is clear that businesses see the connection - which too many Kiwis have still to accept - between growth and the state of our health, education and other social services.

We all want First World services, but unfortunately New Zealand is no longer in the richest club: OECD statistics now show us ranking with countries like Cyprus and Slovenia, rather than the United States, Britain, Canada or Australia, countries we have traditionally compared ourselves with.

If, in the last half century, the New Zealand economy had grown by the same margin as Australia's, our health spending would now be 28 per cent higher than it is.

Businesses have certainly got the message that the only sustainable way to get First World health, education, environment or superannuation is to enlarge the economic cake as consistently and quickly as possible. They know also that only business can deliver that growth.

So balanced growth, sustainable over the longer term, received the highest rating in the survey. But a significant minority thought there was something even more urgent than sustainable growth - rapid growth.

This probably reflects concern over the degree to which New Zealand's performance has slipped relative to North America, the European Union and Australia during the last couple of years - even through the boom of the past two years.

This concern about growth came through in many parts of the survey, including that relating to export performance.

There is clearly uneasiness over our continuing reliance on commodity exports, which are price-takers rather than elaborately transformed or high-value-added exports that are usually price-makers.

Concern about growth also showed up in responses on possible free-trade arrangements and frustration at the state of CER with Australia.

"Why can't it be a true single market?" complained one respondent.

Small and medium businesses showed their approval of helping-hand strategies in place of hands-off policies, but at the same time there appeared to be growing concern at measures that businesses consider to be eating away at New Zealand's fragile competitiveness.

Tax loomed large as a growth disincentive. Tax rates for business, tax compliance costs, tax treatment of superannuation investment and of R&D all received comment.

Concerns over tax were not limited to central Government. Criticism of local body rating differentials amplifies much of what was also highlighted in the Dunn report on business compliance costs.

The priority for reducing tax should be business tax first, said most respondents.

Aligning business tax with Australia and other competitors was a popular goal. So was reducing Government spending and Government debt so they grow more slowly than GDP.

"Spend less!" commented some.

Asked what should be the building blocks for speeding New Zealand's economic growth, respondents were voluble.

There is clearly no shortage of ideas to help achieve higher economic growth, but one plaintive recommendation struck home: "Accept that growth is good."

Too many Kiwis apparently don't. Nor do they accept the direct link between business success, economic success and better health, education and law and order.

For business, this is the critical message for this election.

* Simon Carlaw is chief executive of Business NZ

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