Prudence, the name of the game

The Budget has been labelled ‘‘prudent’’ by business leaders but some have voiced unease it didn’t include or signal any move to reduce company tax.

Finance Minister Steven Joyce eschewed going overboard with tax cuts, in favour of a ‘‘balanced budget’’ that includes paying down government debt.

ANZ was the only bank to break into song, labelling Joyce a ‘‘super trooper’’ and comparing the Budget to an ABBA medley.

‘‘I have a dream (delivering for New Zealanders); the name of the game (growth); money, money, money (rising surpluses); gimme, gimme, gimme (health primarily); and lay all your love on me (infrastructure and family income package),’’ was its summation.

But it said the Budget sent out an ‘‘SOS’’ for savings initiatives. ‘‘More domestic saving is required or investment needs to fall,’’ it said bluntly.

Peter Vial, country manager of Chartered Accountants Australia and New Zealand, said the Budget had ‘‘something for everybody’’ but was more responsible than a pure lolly scramble.

‘‘It achieves a balance between continued careful fiscal management and sharing the benefits of sustained economic growth across the community,’’ he said.

‘‘It continues this Government’s focus on maintaining surpluses, reducing debt, growing the economy and supporting the most vulnerable in society via targeted ‘social investment’ spending.’’

But it lacked ‘‘bold ideas’’, he said. There was no ‘‘out of the box thinking’’ on how to increase the country’s skill base, solve road congestion, reduce the prison population or address ‘‘widely acknowledged housing supply and affordability issues’’, he said.

Dieter Adam, chief executive of the New Zealand Manufacturers and Exporters Association (MEA), said it was pleased to see an extra $75m go towards Callaghan Innovation research and development grants.

But he said there was still a need to improve the grants system – otherwise, there was little in the Budget for manufacturers and exporters.

The MEA supported moving to ‘‘a much simpler support system’’ based on R&D tax credits, he said.

BusinessNZ boss Kirk Hope said the Budget was ‘‘solid’’ and gave it a ‘‘B+’’.

But he said failing to cut the business tax rate of 28 per cent was a ‘‘missed opportunity’’.

Deloitte NZ chief executive Thomas Pippos said that by not moving on company tax, the Government was ‘‘bucking the global trend’’.

The Government had instead put the emphasis on ‘‘social cohesion and resilience’’, he said. But he indicated it was attempting to ‘‘evade gravity’’ by ignoring company tax.

A survey carried out by accounting software firm MYOB that was released this week found small businesses were enviously eyeing moves in Australia to ‘‘graduated’’ tax rates for business.

The latest changes in Australia will see firms with annual revenues of less than A$10 million (NZ$10.7m) taxed at a rate of 27.5 per cent while larger firms will still pay 30 per cent company tax.

MYOB New Zealand general manager Carolyn Luey said 63 per cent of the 1015 Kiwi firms it polled wanted the New Zealand Government to adopt a similar regime.

Retail NZ policy manager Greg Harford said the loosening of tax thresholds, which will be worth $20 a week to people earning more than $52,000 a year, would help the sector, ‘‘which is facing a number of challenges’’.

But he said the lobby group was disappointed taxpayers wouldn’t see the extra cash until April next year.

Employers and Manufacturers Association boss Kim Campbell said the Government’s books were in good order.

The EMA was pleased to see Auckland’s Central Rail Link receive $4.4b and that an independent company was being set up to oversee and manage the project, as well with the $9.2b investment in state highways.

‘‘But we are looking for more direction on governance, sustainable funding and a sense of urgency to further rectify the infrastructure deficit we currently have.’’

The dollar held steady US 70.4 cents after the Budget was revealed at 2pm. The NZX 50 closed up 12 points at 7434.