The "cohesive plan" outlined in the Prime Minister's statement points to a stronger economy, Business NZ says.

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Changes in tax and innovation policy were strategic elements that would bring significant improvements in many parts of the economy, chief executive Phil O’Reilly said.

“Indications of lower income tax and an increase in GST, with benefit adjustments to ease the transition, will be helpful for business growth and competitiveness and fairer to all. It will also be important for the government to consider changes to company tax following the Australian tax review.

“Of course taxation can only be reined in if the government also reins in its spending. In this regard it is positive that the Prime Minister has pledged to keep a lid on new spending. This will keep the pressure off interest rates which in turn will help dampen down the exchange rate – this will be welcomed by exporters.”

Mr O’Reilly was pleased the government had been listening to the business sector about science and innovation. Today’s announcement flagging improvements to investment in Crown research institutes and plans to get more commercialisation of research were positive, he said.

“The new spending foreshadowed for science and innovation is appropriate given their strategic power to create high value exports to the benefit of everyone in New Zealand.

“More value for money and real world relevance in skills policy is also important and we will look forward to a more detailed plan of action on these.

“It is encouraging to see that the government has a plan and is sticking to it. The announcements in today’s statement are all consistent with the ‘six-pack’ plan announced last year (improvements in regulation, infrastructure, public services, skills, innovation and tax).

“Similarly, the signal today that the recommendations of the Capital Markets Development Taskforce will shortly be positively responded to – adhering to plans in this manner provides welcome certainty for the business sector.

“There are other areas where business would like to see positive action, including labour law and other regulatory reform – we will continue to advocate for improvement in these areas, including the introduction of regulatory reform legislation and a productivity commission.”