Fast Facts

Hold on to fiscal cap

With the Government coming under increasing pressure to loosen its self-imposed fiscal cap and borrow to fund the public service in particular, the EMA encourages the Minister of Finance to hold tight to the pledge that has been made.

Under the Government’s budget fiscal responsibility rules, it has pledged to keep spending at 30 percent of GDP, and reduce net debt to 20 percent of GDP by 2022.

“It seems every quarter wants more, especially when the country’s books look healthy. However, it’s incredibly irresponsible to call on the Government to borrow to fund wage increases.

“While Minister Robertson faces a daunting task balancing the needs of the economy with the demands of unions, on behalf of business we encourage him to keep the line with the pledge that has been made. If he decides to loosen his fiscal pledge then we would expect borrowings to be tagged for much needed investment in infrastructure.

“Our economic fundamentals are sound, and New Zealand needs some headroom if we go into a downturn.

“It is pointless to blame organisations such as the EMA and other business organisations for contributing to disappointing economic indicators. Slumping business confidence surveys reflect what our members are saying to us.

“It is not surprising that business confidence is declining, when they see a raft of labour law change coming but do not know what the detail is, nor how it will help grow and strengthen the economy.

“While each change may seem reasonable, in a cumulative and compounding way they add up to a significant rewrite of the employment relations landscape that has been a sound platform producing the solid and stable financial position we are currently in.

“Add in an unknown legal framework for reducing emissions, an electricity pricing review, a tax working group and lingering questions around costing/taxing water and you can understand why business is hesitant.

“Which is why, if the Government is genuine about wanting to lift wages it needs to address productivity. Recent reports from the Productivity Commission point to the fact that to sustainably lift wages we need to lift productivity.

“Our Fix the Bill campaign has called on Government MPs to explain how proposed changes will address this issue and how it fits with a modern economy. Why make employment changes now and then consider the Future of Work, knowing that is about flexibility, different working conditions and potentially a very different employment model,” says Mr Campbell.

Source: EMA

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