Cautious Govt fails to tackle big issues, says business

Business Roundtable director Roger Kerr. Photo / Glenn Jeffrey

Business groups say the Budget goes only some of the way to addressing the challenges the country faces.

There were commendable moves but overall the Government was treading water rather than addressing big issues, Business Roundtable director Roger Kerr said.

"We are still lacking the serious coherent economic plan which would alleviate the external vulnerabilities and improve the longer run growth performance," he said.

He praised the move to a Budget operating surplus a year earlier than previously forecast but said the path of government spending was still higher as a proportion of gross domestic product than it was in the first half of the last decade.

The Budget deficit next year of more than $9 billion was more than all the proceeds of partial privatisations of state assets signalled over three to five years.

No account had been taken of the gathering risks in the world economy or of the "demographic time-bombs we are all aware of". There was no discussion about how to reign in the cost of New Zealand superannuation or health costs.

"It is clear that even through another parliamentary term the gap with Australia will widen rather than narrow," he said.

BusinessNZ said the Budget was cautious and safe. But its chief executive, Phil O'Reilly, said it lacked signposts towards future reforms and more could have been done to produce structural change.

The Employers & Manufacturers Association said the increasing of KiwiSaver contributions was better than raising taxes.

EMA chief executive Alasdair Thompson said: "The Budget could have cut deeper, but it's not easy to do with the country in or near recession; making deeper cuts at this time would fly in the face of the lessons learnt from the days of the Great Depression."

- NZPA