Budget 2012: Business call for restraint, growth

Bill English. Photo / Mark Mitchell

A business group is calling for spending restraint to be balanced with new measures to stimulate export growth in today's budget.

The chief executive of the New Zealand Manufacturers and Exporters Association, John Walley, said he did not have high hopes for the budget.

"Will it do much for growth, no, because the Government has resiled from changes to monetary and fiscal policy," Walley said.

"We will see much more of the same, widening current account deficits, more borrowing and more pressure on the currency [and] lower returns to exporters."

Initiatives to reduce spending were necessary but not sufficient; only a balanced economy and growth in exports could deliver a current account surplus, he said.

That meant addressing exchange rate issues, encouraging research and development and investment in plant, and incentivising investment in productive enterprises rather than in asset speculation.

Major policy announcements aside, it was expected the Budget would contain more detail already signalled around tightening tax loopholes. Finance Minister Bill English yesterday said there were no "deep dark secrets" to be released today.

Geof Nightingale, a tax partner at PricewaterhouseCoopers, called the tax announcements "repairs and maintenance". There could be further details on changes to the fringe benefits tax system which now exempts benefits, such as car parks and child care, provided on an employer's premises, as well as benefits received by employees of charitable organisations.

Mineral companies, mainly gold producers, may also learn more about a review of the minerals regime. Nightingale said the "concessionary" regime for miners, where they get upfront deductions for capital expenditure, could be tightened.

The Australian budget nearly a fortnight ago contained what could be the most significant tax news for New Zealand - the decision to delay the cut in corporate tax from 30 per cent was potentially significant, given this country's 28 per cent rate.

"That's a good thing because it preserves our tax advantage," he said.