Forget about major tax cuts, Government says

The Government ruled out "significant tax cuts" over the next three years at the state opening of Parliament today.

The Speech from the Throne read out today by Governor-General Dame Silvia Cartwright, outlining the programme of Prime Minister Helen Clark's new government, marked the beginning of the 48th Parliament.

As widely expected, the speech heavily emphasised building on past economic growth and delivering the dividends more widely.

During the election campaign, National argued strongly for the next government delivering tax cuts due to the economy delivering healthy surpluses to the Government.

Dame Silvia's speech dashed any hopes that Labour may have been persuaded to follow National's lead.

The speech said New Zealand had gone through boom and bust cycles and tax cuts were unaffordable.

"Fiscal loosening -- either by way of large expenditure increases above those already signalled or by way of significant tax cuts -- cannot be considered," Dame Silvia said.

Finance Minister Michael Cullen would look to continue "substantial operating surpluses" in the next few years, but he would also look to improve economic performance which could include changes to the corporate tax structure.

"The review of the structure of corporate taxation...will also be designed to take a wide-ranging look at our current system of corporate taxation with an emphasis on practical signals to lift productivity."

There would be wider policy to place "even greater emphasis" on the importance of savings, productivity, education and skills, science and innovation, and export growth.

The Government programme would also include "significant adjustment" in the tertiary sector.

Stung by headlines of low quality courses on dubious subjects -- such as twilight golf -- Dame Silvia signalled the Government's desire to change how the sector was funded.

"While the general standard of tertiary education here is high, some high profile examples have demonstrated that a system which puts too great a concentration on increasing participation can lead, in some instances, to poorly designed courses and misuse of public money," the Governor-General said.

"Changing the system to prevent such outcomes will require a significant adjustment in parts of the tertiary sector."

The speech also pledged to implement Labour's election promises and the deals done with New Zealand First, United Future and the Greens which helped to form Helen Clark's third government.

The speech also fired a broadside at Telecom and the telecommunications sector.

"My government will be advancing policies to ensure that the telecommunications sector becomes more competitive and that we achieve faster broadband uptake in line with our competitors," Dame Silvia said.

The speech was heavy on the politics of inclusion and pointed out the Government had been formed by a variety of parties holding different political positions.

"My government is deeply conscious of the honour bestowed on it in taking office again. Its mission is to lead the economic and social development of our proud, independent South Pacific nation. It seeks to work alongside a broad cross section of New Zealanders to achieve the best results for New Zealand."

- NZPA