In the cross hairs of economic peril

The New Zealand economy is navigating perilous waters. Inflation and interest rates are reaching alarming heights, pushing many businesses to the brink of collapse. We're witnessing a surge in liquidations, mergers, and acquisitions as enterprises strive to adapt and survive amidst this turbulent economic environment. Compounding our challenges is a global trend of government-driven economic slowdowns, spurred on by the need to rein in excessive spending incurred during the peak of the Covid-19 pandemic. Unfortunately, it's a bill that we're all being forced to pay.

Amidst this economic uncertainty, the spotlight falls on the government's commitment to implementing tax cuts. While tax reductions can be a powerful tool for economic stimulation, their efficacy hinges on strategic allocation. Merely slashing taxes by providing taxpayers more money risks fuelling inflation rather than fostering sustainable growth. To truly bolster our economy, tax relief must be carefully directed towards sectors that serve as engines of expansion, particularly our vital export industries and tourism sector. It's time to transcend the confines of election promises and prioritise the long-term economic well-being of the nation.

Redirecting tax breaks towards targeted areas of investment is paramount. Channels such as research and development, bolstering the food and fibre industry, and easing the burden of employing migrants are avenues through which tax relief can catalyse meaningful economic expansion. By channelling resources where they can spur genuine growth, we pave the way for a more robust and resilient economy.

However, overcoming our economic challenges requires a multifaceted approach. While commendable steps have been taken to curb government spending, the potential benefits could be nullified if the ill-advised tax cuts proceed unchecked. Such a scenario risks exacerbating the plight of struggling businesses and prolonging our recovery from the ongoing financial crisis.

Innovation stands as our beacon of hope amidst adversity. Businesses, driven by the imperative of survival, are exploring avenues to enhance efficiency and boost productivity. Yet, innovation cannot flourish in isolation; it requires an enabling environment fostered by government support. Measures such as R&D tax relief and investments in infrastructure tailored to bolstering business efficiency are essential. Crucially, emphasis must be placed on empowering exporters, the lifeblood of our economy.

Addressing the skills deficit within our workforce is another pressing priority. This necessitates a revamp of our immigration policies and the provision of industry-specific training programs. Current immigration processes are overly convoluted and sluggish, hindering both employers and migrants alike. Fresh, innovative approaches, informed by industry insights, are imperative to surmounting this challenge.

The current chaos engulfing vocational training provision demands urgent resolution. Access to essential training must be streamlined that is tailored to the needs of employers and learners is a vital step. In addition, ensuring parity between New Zealanders and migrants. Collaborative efforts between the government and industry hold the key to swiftly untangling this predicament and charting a course towards a more robust vocational training framework.

In conclusion, the government must rise to the occasion, prioritising the growth of our export sectors and harnessing industry collaboration to drive the innovation essential for our economic revival. Only through concerted, strategic joint Government and industry action can we navigate these troubled waters and emerge stronger on the other side.

Mike Chapman,
Chair New Zealand Ethical Employers Inc