Clendon David: Budget Debate 
Clendon David: Budget Debate 
[Volume:663;Page:11330] 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. The Budget is very much a document about money. It is a very practical document. But it is also a way in which a Government can express its vision. It can share its vision for this country by the way in which it assigns funding. Each Budget has its own unique character; something that defines and differentiates it from other years. This year’s Budget clearly will enter the record as the inequality Budget—a singular statement that it is OK to transfer wealth from the least well off to the most well off. That is a very unfortunate vision for the Government to have. It is not the vision that we have heard being spoken of but we must go by what people do rather than by what they say. 
We are told that this Budget is about improving growth and improving the country’s economic performance but it is very hard to see anywhere in this Budget any net benefit for the small and medium sized enterprises that are the heart and soul of this country’s economy. They always have been and we can expect that they always will be. The big headline treat on offer—the lollies as it were—for business is the cut in the tax rate for companies and for high-income earners. But as any hard-working small-business owner knows in order to pay tax a business must first make a profit. That has been very difficult for many of our smaller businesses to do over the last year or two. There is not a great deal in this Budget that will help them to achieve that profit and start to pay any tax at all. 
The figures tell us that the tax cut will leave on average about $365 million a year in the pocket of businesses. On the face of it that is a good thing. But we have heard less about the fact that the rise in other costs will quickly erode the value of that tax cut. In fact that erosion has already begun. The rise in the accident compensation work levy will come out at about $150 million a year; something like 40 percent of the tax cut will be gone before businesses even see it. That 40 percent increase in the accident compensation levy was based on the back of an entirely bogus so-called accident compensation scheme crisis which was manufactured by the Minister for ACC over the last year. The increase in GST will hurt business and we know this. There will be a one-off cost to all retailers and particularly to our smaller retailers. There will be the one-off cost of changing computer systems and relabelling but also ongoing consumer resistance as retailers will need to renegotiate. Reassessing pricing points for various products means that either businesses will lose because they will be unable to absorb the cost or consumers will lose because retailers will feel obliged to put up their ticket prices. A recent survey of over 400 retailers revealed that more than 80 percent of them expect the rise in GST to be bad for business. 
We know that small and medium sized enterprises had no opportunity to comment on or to inform the Minister of Finance or the Government of the potential effects of GST because we asked the Minister that question. He confessed that prior to making decisions about GST there was no consultation with small business there was no acknowledgment and no opportunity for them to say their piece or to influence that decision. 
This is very much a business as usual Budget. It tweaks here and there it changes things around the margin but it completely misses the point that business as usual is not an option given the changes in the national and international context in which our business people must operate and will operate in into the future. The market nationally and internationally is crying out for products that deal with the very new challenges we face such as the challenges of climate change and peak oil. There is also the challenge of the changing preferences and expectations of consumers both here and overseas and in particular in the high-end consumer markets—those who have disposable income and those who have choices about where they spend their consumer dollar. That is the way of the future for New Zealand and there is very little in this Budget that will in any way fulfil the vision of building an economy and a business sector that can meet these new needs. We know that there is a demand for safe food for organic food and for novel fibres. We know this because some of our small-business owners and not-so-small business owners are already endeavouring to meet that demand. 
One of the keys to unlocking the potential in our economy is in research and development to find new products new materials and new processes that are resource-efficient environmentally benign or that enhance the environment and meet the demands of socially responsible consumers. In New Zealand as elsewhere consumers are becoming more socially and environmentally conscious. Research undertaken in New Zealand tells us that over one-third of consumers now look at the environmental and social characteristics of a product before they purchase that product and that number has been growing demonstrably over time. The research that has been carried out over the last decade or so tells us that. 
The so-called Lifestyles of Health and Sustainability—LOHAS; there is even an acronym for these people—is a market place for consumers in North America Japan and Germany and indeed here in New Zealand. This is the growing market for New Zealand - manufactured and designed products. Nothing in this Budget contributes or supports the businesses and the innovation that might help to meet this growing demand.  
Small to medium sized enterprises in New Zealand the small and creative businesses that have historically been the producers of ideas and innovation will look in vain for any real assistance in this Budget. A significant chunk of the increased funding for research in there the so-called new funding of $321 million was in fact stolen from environmental research—reprioritisation I believe is the phrase that has been used. We are already under-investing in environmental research. We were embarrassed when we produced our first state of the environment report in 1999 that the most common phrase in that report was “We don’t have the information. We don’t know.” By the time of the second environmental report in 2007 the situation had not improved. This country lives and dies by its green brand its “100% Pure New Zealand” brand; that is what our economy rests on. If we do not do the basic environmental research and monitoring we will lose the integrity of that brand and our markets will diminish accordingly.  
To suggest that new research funding is supporting business endeavours when in fact a large chunk of it is removed from a key area of Government activity is a sham. In any case the research funding that has become available is very much targeted to the large companies—those with a track record in research and those with a large spend already. I do not think those companies ought not to be supported but relatively small amounts of money could be disbursed to small growing businesses. We see the voucher system proposed as being overly bureaucratic and difficult; most businesses will look at it and think the opportunity cost of applying for those small amounts of funding simply will not be worth the candle. The likelihood is that it will be underutilised.  
This is a time when the Government should be investing as it never has been investing before and supporting companies that want to break into new products new markets and innovations. The Government should know this because in a matter of weeks of National being elected to Government the Prime Minister was written a letter by some of New Zealand’s most successful and well-known business people. They were pleading with him to grab the vision of green technology and of new technologies that will deal into the future with the very real problems that are faced locally and internationally. They were people like Phillip Mills who took a successful local business and turned it into a larger and very successful international business; people like Geoff Ross who developed 42 Below from very humble beginnings; people like Jeremy Moon who saw the opportunity in the research around fibres and turned that into a multimillion dollar international business; people like those running Ecostore—a gentleman and his wife started making soap by hand at Mangawhai and they now have their product in every supermarket in the country and are exporting to the US and the UK.  
These success stories were in part built on support from the previous Government through funding streams to support non-governmental organisations and to support environmental development agencies in large ways and small. There was active support from the Government to enable these companies to grow to fill the gap and critically to assure them they were actually supported by this Government. The challenge for this Government now is to demonstrate that it has some vision and to model best practice around Government procurement and around its own actions; not to talk about supporting business and critically small business but to actually put the policy settings there to put the funding there and to provide the practical assistance that will grow our small companies grow our economy and really give us some genuine growth and some genuine prosperity which this country needs—growth that is sustainable growth that meets the needs of current demands. Kia ora koutou.