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"The 2005 Budget should generate a significant economic benefit to businesses and to Kiwi households," Wairarapa MP Georgina Beyer said today.
"The $1.42 billion suite of pro-business tax changes are equivalent to a cut of around 2 percent on the corporate tax rate and will deliver a better growth dividend because they are designed to raise productivity and to support the transition to a knowledge-based economy.
"And the Budget centrepiece, the Securing Your Future savings package, has the potential to lift household savings rates and to arrest the trend toward declining rates of home ownership.
"New Zealand's domestic savings levels are among the lowest in the OECD. This carries with it a number of costs. It puts pressure on the current account, translates into higher interest rates and makes us highly dependent on foreign capital with the result that a substantial proportion of our national income is reclaimed by foreigners as profits.
"Developing stronger savings habits will help us to reduce these risks and should strengthen the New Zealand share market.
"Savings also carry a strong private benefit to the saver as the financial security they represent brings with it more freedom, choice and independence."
Ms Beyer said the Budget commitment to inflation-proof incomes by raising personal income tax rate thresholds 6.12 percent every three years would provide New Zealanders with a more secure financial environment within which to plan. The first adjustment will take place on 1 April 2008 and will raise the threshold for the 21 percent rate from $38,000 to $40,324.
"The Budget forecasts show that although the economy is projected to slow from a growth rate of over 4 percent this year to around 2.5 percent over the next two years, the slowdown is expected to be reasonably gentle and the landing soft. This is good news for New Zealanders and suggests they can continue to face the future with confidence.
"Unemployment, for example, is expected to remain below 5 percent through the four year forecast period."
Ms Beyer said the Government could claim some credit for the economy's new resilience as it had engaged early with the private sector to promote business and economic development. Budget 2005 continued this record, committing another $204 million over four years to research, science and technology; another $31.1 million to promoting overseas trade negotiations and another $341.3 million for tertiary education, including $44.6 million for industry training and to further expand the successful Modern Apprenticeships scheme.
"But although the Budget is hard-headed about lifting New Zealand's economic performance, it is also a Labour Budget and reflects traditional Labour concerns about creating a society where everyone, regardless of the circumstances of their birth, can achieve their full potential.
"The Budget is true to these values. It delivers the largest health vote ever; extends low cost GP visits and pharmaceutical charges to 18 to 24 year olds enrolled in Primary Health Organisations and pours millions of dollars into early childhood education and into primary and secondary schools.
"I am proud to be associated with this Budget. It gives Labour a strong platform on which to contest the coming elections," Ms Beyer said.
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