Tax and superannuation reforms announced in Australia at the weekend were made under circumstances unique to that country, and changes on the agenda here will be made with a different set of objectives, Finance Minister Bill English says.
Changes made in Australia in response to the Henry Review include a 40% tax on big miners' profits, a rise in compulsory employer superannuation contributions to 12% from 9% by 2019, and a gradual cut in the corporate tax rate from 30% to 28%.
New Zealand's corporate tax rate is 30% and compulsory superannuation contributions stand at 2%.
The adjustments in Australia sparked comments from commentators here that it could give yet another incentive for New Zealanders to head across the Tasman and capitalise on comparatively generous superannuation schemes.
Council of Trade Unions economist Bill Rosenberg said the Australian superannuation move would attract more New Zealand workers to Australia and boost funds for investment in its economy.
Business New Zealand chief executive Phil O'Reilly said dropping the Australian corporate tax rate 2 percentage points over four years was a modest reduction and matching it here "should be relatively achievable for us."
Mr English said New Zealand's tax package was put together to suit the needs of its economy and there were different objectives.
"They're dealing with their resources boom; we're trying to rebalance our economy to get stronger exports and savings and investment. So you'll just have to wait and see in the Budget what decisions we were able to make," Mr English said.
"The Australian package was always going to be conditioned by the fact that it's election year and they've taken a fairly political view of the Henry Review that suits their circumstances.
"We need to maintain competitiveness with Australia, but in our view the more important area is going to be to compete for talent and to compete for New Zealanders who will be looking across the Tasman at an economy that's been growing pretty strongly and weighing up their opportunities there.
"So we need to make sure that we've got well rewarded opportunities here," Mr English said.
The Australian Chamber of Commerce said the increase in compulsory super contributions would be costly for many small businesses, despite the slight drop in the corporate tax rate, and likely to force employers to cut wages or lay staff off.
NZPA and NBR Staff
Tue, 04 May 2010