The Government's programme for lifting economic performance
Since coming into office, the Government has been putting in place policies to rebalance the economy and make it more competitive. In 2009, we initiated a broad-based economic agenda across six policy areas – providing better and smarter public services; removing red tape and unnecessary regulation; investing in productive infrastructure; strengthening our tax system; lifting education and skills; and improving performance across science, innovation and trade. This work continues.
Providing better, smarter public services: The previous two Budgets redirected $3.8 billion of resources, primarily to frontline services, and constrained growth in new spending by reprioritising lower value spending towards high value activities. Agencies have contributed to a range of collective processes within the public sector, such as joint procurement, shared services and benchmarking, which are leading to significant savings. We are also lifting the quality of capital investment decisions, through the publication of the Government’s first Investment Statement, the work of the National Infrastructure Unit and instilling better commercial discipline on capital projects.
Removing red tape and unnecessary regulation: We have already delivered 12 major regulatory reviews since we took office – including in the key areas of resource management and employment relations – and have a further eight reviews under way. We have overhauled regulation-making processes to be far more certain that the benefits of new regulation exceed the costs. We now also have systems in place for ensuring that our existing stock of regulation is regularly examined to determine whether it continues to be fit for purpose.
Investing in productive infrastructure: The previous two Budgets have seen major new investment in ultra-fast broadband, social infrastructure and the state highway network. These assets assist firms to deliver their products and services, and lower domestic cost structures. These assets are also critical to attracting high-skilled individuals and investors to New Zealand. The Government is committed to rebuilding Christchurch’s damaged infrastructure, as well as continuing its investment in infrastructure throughout New Zealand that supports increased economic growth. The National Infrastructure Plan 2011 will set out a framework for how this will occur. There will be continued focus on increasing the use of alternative procurement methods such as Public Private Partnerships, as well improving management of the Crown's assets.
Strengthening our tax system: The tax changes announced in Budget 2010 are now largely in effect – the biggest tax reform seen in New Zealand in 25 years. The changes have produced lower and more uniform effective tax rates across the economy, including on property investment, improving the incentives to work, innovate and take risk. All personal tax rates have been reduced, with the top rate cut to 33%. The company tax rate has been lowered to 28%, and following Budget 2010 almost three-quarters of income earners face marginal income tax rates no higher than 17.5%. Raising the rate of GST to help pay for these changes has contributed to ongoing efforts to rebalance the economy, reducing debt-fuelled consumption and encouraging more saving. We now have a tax system that is more internationally competitive and attractive to both talent and investment.
Lifting education and skills: Introducing National Standards in our primary schools is a major achievement that will pay off over years to come for our children, for parents and for teaching professionals. We have initiated a wide-ranging set of reforms in tertiary education, with more to come this year. We have also made good progress with one of the biggest challenges to our education system - the retention in education and training of our 15 to 19 year olds. We continue to see education and skills as central to building a strong platform for growth.
Improving performance across science, innovation and trade: This has been a major focus of recent Budgets, with substantial new investment in business innovation and public private partnerships to support research and innovation in the primary sector, conclusion of trade agreements with Malaysia, Hong Kong and ASEAN, conclusion of the CER Investment Protocol with Australia, and major developments arising out of the Food Innovation Network and aquaculture reforms. This area targets building on our competitive advantages, and we cannot be complacent: it is critical to keeping our economy internationally competitive and building new opportunities.
Budget 2011 continues to support the necessary economic adjustment towards a more balanced and competitive economy. The Government will continue to progress these six areas.
