David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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The real economy rates Budget initiatives

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Biggest tick – moves towards a broader lower tax take and the rhetoric around the importance of the real economy.

Biggest challenge – growth at 3% in the out years and what happens to borrowing (~$1B per month for 36 months) and net debt ($168b) if the growth is absent.

Biggest disappointments – there was scope to deal with the capital gains/land tax and retirement age issues – they are still out there and will have to be addressed at some point.

Biggest negative to productive investment – watered down R&D support and removal of accelerated depreciation loading on plant and equipment.

Budget initiatives are rated on a scale from -5 (most unhelpful) to 5 (most helpful) on whether they will promote growth in New Zealand's productive sector.

Reducing personal tax rates: 1 - could have gone a lot further had a comprehensive capital gains tax been introduced or spent elsewhere in direct support of the tradeable economy.

Reducing the corporate tax rate: 2 - helpful but could have been more given a land or comprehensive capital gains tax.

Taxing LAQCs as limited partnerships: 2 - should be helpful but enforcement will determine success

Increase in GST to 15%: 3 - cuts elsewhere must be paid for and this does weigh against consumption.

R&D grants and vouchers: 1 - a pale shadow of the R&D tax credit.

Removal of accelerated depreciation rates for plant: -5 - weighs heavily against the productive economy.

Changing the thin capitalisation rules for foreign companies: 0 - it could go either way, enforcement will be important.

tags: budget 2010, productive sector, tax, laqcs, depreciation


1 Comment(s)

John Holm - 26 May 2010 at 15:10 PM
Some interesting comparisons, Japan's dept is 200% of GDP, a high export country, NZ's debt 90%+ of GDP and growing.
NZ has 4.34 million people, Japan 105 million.
Only 30% of Germans own there own homes. Their focus in life is "investing and saving".
Japan like the USA and Germany have large domestic markets, NZ does not.
NZ needs to double its population by 2020, "de-incentivise" owning a home and being in property development and encourage investment in the "productive/tradeable" sectors.

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