Business leaders yesterday welcomed a penny-pinching Budget, saying it was prudent for the country to get its house in order during tough times for the global economy.

But others said the Government was not doing enough to drive growth in the productive sector and increase export earnings.

Employers and Manufacturers Association acting chief executive Bruce Goldsworthy said the so-called "zero Budget" would encourage firms to invest.

"By reining in spending thereby keeping in check its rising debt the Government will give business the headroom to grow the economy," Goldsworthy said.


"There's no way we can keep on borrowing the way we have been - Europe's troubles point to what would happen if we kept down that track."

Manufacturers and Exporters Association chief executive John Walley said initiatives such as new spending on research and development and giving the IRD more clout to crack down on tax avoidance were steps in the right direction but not enough on their own.

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"The more fundamental problems, such as a lack of export growth, have once again been ignored," Walley said.

"Generally the right sentiments are there but the action is too timid ... the Government must also address the big-picture issues such as the capital gains or land tax issue to really have a broad-based tax take."

Auckland Chamber of Commerce chief executive Michael Barnett said the new R&D spending was positive, but it would provide long-term rather than short-term gains.

Near-term economic benefit could be achieved through establishing better partnerships between businesses and the Government to drive exports, Barnett said.

Catherine Beard, executive director of ManufacturingNZ and ExportNZ, said most businesses would be supportive of yesterday's "fiscally prudent" Budget.

"The expectation was that there wasn't going to be a lolly scramble anyway," Beard said.

She said keeping a lid on Government spending could help keep the New Zealand dollar in check - the recent strength of which has been affecting exporters.

"There's a lot of support in the business community for prudent and careful management of Government spending," Beard said.

Retailers Association chief executive John Albertson said if consumers got more out of a Budget they spent more, but there had been no surprises yesterday.

"I don't think it will have any major negative impact on retail - it just won't give us a pick-up," Albertson said. "It's basically business as usual."

Briscoe Group managing director Rod Duke, whose listed firm runs Briscoes, Living & Giving and Rebel Sport stores, said the Government was taking a sensible approach to spending.

Duke said: "I think if it had been a big-spending Budget ... our capacity to borrow at the right interest rates overseas would seriously be in jeopardy if international bankers couldn't see that we are at least making some effort to get back to a surplus."