Budget to sprinkle funds to international growth agenda

Government ministers start drip feeding details to the public in the weeks leading up to the May 61 Budget.

New government spending in the May 16 budget will be skewed towards supporting fast-growth export businesses, Prime Minister John Key says.

His announcement of a $158 million boost to tourism funding over four years is the first of several set-piece announcements of new government spending, which ministers will drip feed to the public in the weeks leading up to the budget.

Mr Key told a Business New Zealand pre-Budget lunch in Wellington that an "international growth package" would be a key element of the Budget and talked up the potential for a much deeper economic relationship with China, where he headed a delegation last week.

He would not elaborate on what other initiatives would be in the package, but Finance Minister Bill English told a pre-budget briefing last week the government would also be seeking more foreign direct investment into New Zealand.

However, the government was determined to see progress towards the goal of increasing exports from 30 percent of gross domestic product to 40 percent.

Mr Key said discussions with Chinese counterparts last week suggested the informal target of doubling trade between the two countries from $10 billion to $20 billion between 2010 and 2015 appeared to be on track.

And where previously the balance of trade had been in China's favour, it was now running in roughly even balance, with huge potential for New Zealand to earn more from the world's most populous nation, which is still expecting 8 percent-plus growth a year.

Chinese government figures showed 82 million of its citizens made tourist excursions to other countries, of whom 200,000 came to New Zealand.

Officials expected that some 400 million Chinese would holiday abroad within five years. A straight-line extrapolation suggested as many as one million might make their way to New Zealand annually by then.

Opportunities in food exports were also large, said Mr Key, who noted New Zealand arguably faced less competition in China for its agricultural, "soft" commodity exports than Australia with its bias to "hard" commodities like coal, iron ore and natural gas.

Preserving New Zealand's reputation for clean, safe food had to be managed "incredibly carefully" as a result.

"If we undermine that brand we undermine perceptions in those markets, and it's critical that we don't," he said, suggesting exporters using the New Zealand name to market their products could face quality controls.


Login in or Register to view & post comments