Nick Smith - Nelson MP, Minister National Government

Budget 2010: Building Our Economy

Budget 2010 focuses squarely on getting the economy growing faster. It helps Kiwi families get ahead. And it sets New Zealand on a path to turn back debt and return to surplus.

It delivers the biggest reform of our tax system for nearly 25 years.

National's first budget in 2009 was about protecting New Zealanders from the sharpest edge of the worst international financial downturn since the Great Depression. Budget 2010 is about building the recovery by addressing the serious imbalances built up over the past decade that pose a risk to New Zealand and Nelson's future.

From 1 October this year, personal taxes will be cut. GST will increase a small amount to 15 per cent. Superannuation, Working for Families, and benefit rates will all increase to compensate for the GST rise. As National promised, most Kiwi households will have more money in their pockets.

The tax reforms will leave someone on the average wage almost $15 a week better off. A family on the average household income with two children will be about $25 better off.

And next year, the company tax rate will fall to 28 per cent, ensuring New Zealand is competitive internationally.

For too long, New Zealand has relied on investment in property speculation, rising debt, and unsustainable increases in government spending. The Budget takes action to encourage investment in the productive parts of the economy such as exporting. It gives the vast bulk of Kiwis extra cash in their pockets so they have more choices.

A young Nelson couple on the average wage recently told me their response to the Budget was to use their income tax cut of $27 a week to increase their mortgage repayments on which there is no GST. These are the sort of choices that the Government wants to encourage.

The Budget also continues this Government’s multi-billion dollar investment in infrastructure such as high-speed broadband, roads, rail, and schools.

The Government is also investing big dollars in science and innovation that will boost productivity across the primary sector.

One of the significant announcements in this year’s Budget was the $321 million earmarked for research, science and technology of which I am confident Nelson's Cawthorn Institute will get a slice.

The centrepiece of the funding increase is a $234 million boost for support for business research and development over four years. Its aim is to get more firms using science, research and technology to deliver more valuable products and services, which in turn allows them to succeed in competitive export markets and to create new and better-paid jobs for New Zealanders.

More funding for science will encourage New Zealand companies to invest in new ideas and indirectly and inevitably, the agricultural sector will benefit. For example, companies that may stand to gain from the technology development grants scheme include those making animal health products or horticultural equipment.

This Government is also directly supporting innovation in the primary sector by investing heavily in research and innovation, with a particular focus on research into agricultural greenhouse emissions.

The Government this year opened the New Zealand Agricultural Greenhouse Gas Research Centre. This is a partnership between virtually all the scientific organisations in New Zealand, both public and private, with an interest in agriculture.

Funding is coming from the Primary Growth Partnership. The PGP is a government-industry partnership that by 2013 will have injected $190 million into major programmes of research and innovation to boost the economic growth and sustainability of New Zealand's primary, forestry and food sectors.

New Zealand has a proud history of primary sector innovation, and one that belies our small population. We pioneered refrigerated transport in the late 19th Century, sending sheep carcasses to the United Kingdom. We also developed herring-bone milking sheds, used genomics to improve cow and sheep breeding rates, and worked on new pasture breeds and varieties to make our farms more efficient.

Budget 2010 strengthens our economy, providing an additional 170,000 jobs and lifting economic growth and national incomes. It puts our economy right for the long haul.