More spending on science and innovation, lower ACC levies and a focus on irrigation projects are all featured in Budget 2013, which Government says builds on the momentum created by the previous four budgets across the Government’s wide-ranging programme. The news has been welcomed by business leaders around the country.
“Every budget since 2009 has been presented against the backdrop of extremely challenging economic conditions. In particular, the global financial crisis, the Christchurch earthquakes and ongoing uncertainty around the world have affected most New Zealand households and businesses,” says Prime Minister John Key.
“While those challenges remain, improvements across a range of indicators and improving confidence among New Zealanders mean Budget 2013 has been prepared with a fresh sense of optimism,” he says. “Growth is better than in most other developed countries, we are on track to surplus in 2014/15 and we are investing in programmes that will support jobs and deliver better public services.”
A feature of the budget is a $100 million-a-year internationally-focused growth package, providing extra research and development assistance to businesses, additional funding for tourism and more resources for marketing New Zealand to international students.
The budget forecasts economic growth to average between two and three percent a year over the next four years. It also allows for ACC levy cuts on households and businesses of around $300 million in 2014./15, increasing to around $1 billion in 2014/15. When combined wtih the $630 million levy reduction in 2012/13, these changes will amount to around 40 percent lower ACC levy rates for households and businesses.
Meridian Energy will be the next company prepared for a share offer to New Zealanders later this year, it was announced.
Returning books to surplus in 2014/15 gives business a lot of confidence , says Kim Campbell, chief executive of the Employers & Manufacturers Association. “This budget is a good one for keeping the emphasis on financial stability while helping the economy edge forward,” he says, adding that employers will be delighted with the news that ACC levies are to come down. “The extra investment going into skills and employment carry the right messages.”
The ACC levy decrease has also been welcomed by Business NZ. “However, these result from artificially high levies over recent years,” says chief executive Phil O’Reilly. “We believe premiums should be set independently of Government to ensure they reflect insurance values rather than political considerations.”
Business NZ says the Budget shows a careful and measured approach to spending in areas that have the potential to improve New Zealand’s competitiveness, such as a continued focus on innovation, internationalisation and skills. The international growth package (assisted by below) will be welcomed by business, says O’Reilly.
Science and innovation funding increased
Science and innovation funding will be increased by $50 million a year. This takes the Government’s annual investment in research and development in 2013/14 to a record $1.36 billion, Key announced. Total direct cross-portfolio funding for science and innovation has risen by 28 percent over the past four years, with $97.7 million being directed to the primary industries.
New funding over the next four years includes:
- $75.2 million for business R&D grants
- $31.3 million for repayable grants for start-up businesses
- $73.5 million for the National Science Challenges and
- $20 million for the Marsden Fund.
Irrigation to open up land
In addition, as announced earlier this year, funding of $80 million has been confirmed from the Government’s Future Investment Fund using proceeds from the share offer programme for regional irrigation projects. Minister for Primary Industries Nathan Guy.says that after the extreme drought that most of the country has struggled through this year, the need for better water storage is obvious.
“There is no shortage of water in New Zealand, but we lack the ability to store and use that water when it’s needed most. Currently only two percent of rainfall is used for irrigation. We need to do a better job of using this resource. Increasing irrigation could see a further 420,000 hectares of irrigated land becoming available, creating thousands of new jobs and boosting exports by $4 billion a year.”
A new Crown company is to be established on 1 July to act as a bridging investor for irrigation projects. This will involve short-term, minority investments to help kick-start these irrigation projects.
Brighter future ahead
Key says that many other developed countries are still struggling with too much debt, little or no growth or a combination of both.
“Budget 2013 sets out the next steps in our long-term programme, which we started after we were first elected in 2008, to ensure that we have a brighter future in the country.
“Momentum is building towards a stronger, more stable economy that can again weather global storms and deliver opportunities, higher incomes and more jobs for New Zealanders,” says Key.