17 May 2011

Business wants plan to fuel growth

7:34 am on 17 May 2011

The business community wants to see a plan from the Government in Thursday's Budget to promote economic activity.

The National-led government has signalled an austere approach, focused on tightening spending in response to the extra costs forced upon it by February's devastating earthquake in Christchurch.

The Government's target for this budget is no new net spending, meaning any new spending by departments will have to be offset by cuts elsewhere.

The Crown's bank balance is hampered by tepid economic growth, driven in part by cautious households who are repaying debt, while credit rating agencies want to know how the Government will return to surplus by 2016.

Institute of Economic Research principal economist Shamubeel Eaqub says the target needs to be there but will be difficult to achieve.

Business New Zealand chief executive Phil O'Reilly says spending cuts to Kiwisaver and tighter the rules on student loans and Working for Families are welcome, if not going far enough.

Mr O'Reilly says plans to fuel growth through innovation and skills are missing.

Council of Trade Unions secretary Peter Conway says the priority should be on creating jobs.

He says the Government's plan has been tax cuts for the well-off, spending cuts and hope that it all works out.