KEY POINTS:
Business must "rise to the productivity challenge" - the same way it has been urging the Government to do over the years, says Michael Cullen.
Continued efforts to boost productivity will be a feature of next week's Budget said the Finance Minister in his pre-budget speech delivered
today.
Last year there was the strongest productivity growth in New Zealand for a decade, said Cullen.
"But we know that we have more work to do lift productivity if we are going to give New Zealanders the incomes they deserve, make our firms more successful, and grow our economy while fending off inflation."
There was, however, "only so much the government could do to help the economy lift productivity rates."
Skills training was an area where it could, and a "revitalisation" had begun. More skilled workers were now entering the economy as a result of the Modern Apprenticeships scheme.
Business now had to "rise to the productivity challenge" - as they had called for the government to do in years past.
Now that business tax cuts had been made and the investment in skills had occurred, it was time business did its part.
"We have listened, we are acting, and we now need to work in partnership with you to take the next steps."
"In last year's Budget we did our part to invest in productivity through our cut in the company tax rate and the introduction of research and development tax credits," said Cullen.
"We dramatically enhanced the KiwiSaver scheme which will lead to a huge pool of domestic capital for firms to draw from for many decades to come."
This was done because the Government knew that in the long-term, firms had to start investing more capital per worker, "if we are going to ever make talk about closing the wage gap with Australia more than just empty rhetoric on tax cuts."
* There will also be "serious investments in improving broadband, lifting our focus on priority areas in the economy, and in improving our international connectivity." Cullen said however, that the Government would not "get caught in a bidding war with the opposition on this issue." National has promised a $1.5 billion public investment in rolling out fibre optic cable to homes and businesses across New Zealand, if it is elected.
* Cullen said next week's Budget will also include some final decisions on international taxation and an "ongoing programme of tax simplification measures that will benefit the small business community."
- NZ HERALD STAFF