Summary of business issues in the Prime Minister's February 2010 statement

The Prime Minister’s state of the nation speech at the opening of Parliament covered important issues for business. Much of the content is in line with Business NZ recommendations advocated last year in Setting New Zealand Apart and will clearly be given thumbs up by the business community.

The focus is on the Government’s ‘6-pack’ plan (improvements in regulation, infrastructure, public services, skills, innovation and tax) – good to see that the Government has a cohesive plan and is sticking to it.

Tax

The Government has clearly signalled that proposals for a land tax, a capital gains tax, and a risk-free return method will not go ahead.
What is on the agenda: an increase in GST (no more than 15%), lower personal tax rates and changes to the way property is taxed - with more details to come in the Budget.
While there was no overall reform of Working for Families announced, there was an indication that there will be changes to prevent high income earners from abusing the system.
One glaring omission was any discussion on the Australian Henry tax review. Any moves by the Australian Government to lower their company tax rate would need to be met by the same change on this side of the Tasman. We would expect the Government to be ready for such an eventuality if it arises this year.

Regulatory Reform

The Prime Minister’s remarks on regulation highlighted the work programme of reviewing existing regulations to identify and improve or remove those that are unnecessary or ineffective, but there was no significant detail announced e.g. around a Regulatory Responsibility Bill or the establishment of a Productivity Commission.

Emissions trading

Comments on emissions trading stressed the need for a balance between environmental and economic concerns. Business NZ will continue our advocacy towards making this a reality.

Access to natural resources

The intention to better utilise New Zealand’s significant petroleum and mineral resources was outlined.

Labour Law

The Government will look at whether labour laws are imposing excessive costs on business and hindering job creation. The PM indicated that legislation to improve the Holidays Act will be introduced later in the year and that problems with personal grievances under the Employment Relations Act will be investigated.

Education and skills

The statement included a focus on young people and pre-employment education and training and greater opportunities to learn trades and practical skills in schools.
In tertiary education, the statement focused on getting more value from the dollar and more relevance to the workforce.

Trade

The government wants to further progress the Single Economic Market with Australia and progress the many trade deals currently under negotiation.

Overall, this was a positive announcement of a largely business-friendly agenda by the Government. Business NZ’s advocacy will be focused on getting good execution of the stated plan.