Fat pile of reading awaits Finance Minister

Corin Dann opinion

By Corin Dann Breakfast Host

Published: 1:15PM Friday November 27, 2009 Source: ONE News

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The Finance Minister Bill English is going to have some pretty interesting reading material to chew over these summer holidays.

Due in the next few weeks are three very significant economic reports recommending ways New Zealand could lift its struggling economy.

The 2025 Report, the Capital Markets Taskforce Report, and the Tax Working Group report.

All these reports are likely at the very least; influence Bill English's thinking when he starts formulating his next Budget.

The first one due is Don Brash's report on how to close the income gap with Australia by 2025. This was report was commissioned as part of ACTs support agreement with National.

Given the magnitude of the task of catching up with the 'Lucky Country' by 2025 this report is likely to contain some pretty bold proposals.

In his book excellent book Wool to Weta, Professor Paul Callaghan from Victoria University says catching up with Australia would require New Zealand to have another five export companies the size of Fonterra!

What will be interesting about the 2025 report I think is whether it has any genuinely new proposals to offer in terms of lifting New Zealand's woeful productivity rate.

Remember, experts have been looking at New Zealand's productivity conundrum for many years.

Dr Brash, of course, is well known for his free market views on how to improve the New Zealand economy, and one would expect the report to have a similar free market flavour.

This does create a potential problem for Dr Brash in that the National government, it seems, has ruled out any radical policy changes in its first term at least. Therefore, the report runs the risk of becoming a political football.

However, hopefully the report, which is released on Monday, does get a decent hearing and any fresh ideas get a chance to be properly debated.

We need as much discussion as possible at the moment about New Zealand's economic plight.

The second report on Bill English's reading list is the Capital Market's Taskforce report due mid December. This should offer ways to help improve confidence in the country's financial markets, in particular the share market.

It should also offer solutions for helping to deepen the capital markets.

What will be interesting to see is if it contains any recommendations around partially floating state owned enterprises.

This idea is seen amongst some in the financial community as crucial to providing depth and scale to our small stock exchange.

However, a recommendation along those lines could, like the 2025 report, come in for some political flak.

Many New Zealanders are still very wary about privatisation, something not lost on National.

The third report is from the Tax Working Group.

Its report is now due early next year, though its thinking is pretty well known as it has already released a number of summary reports on its meetings.

Its general view is that the current tax system is not sustainable and reform is needed.

Over the course of the year it has, among other things, looked at capital gains tax, land tax, and increasing GST.

All of these ideas the government has said it is open minded to, but not overly keen on.

A better sense of what the group is thinking and how receptive the government is will come on Tuesday when Victoria University holds a full-day tax conference - at which the Tax Group members and Finance Minister will speak.

Oh, and I nearly forgot...

In addition to the three reports, Mr English will also have next month's Half Year Fiscal Economic Update to chew over.

And, already the signs are that isn't going to be an easy read.

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