Businesses in New Zealand and Australia want tax changes to get closer to a single economic market.
A joint report (‘Strengthening Trans-Tasman Economic Relations) released on December 12, 2012 by the Productivity Commissions of New Zealand and Australia recommends many steps to help align the business environments of the two countries.
The Report contains useful recommendations in areas such as investment, intellectual property, occupational licensing, visas, biosecurity, quarantine, student loans and others.
These can help build on the Closer Economic Relations (CER) process towards the two countries truly becoming a single economic market.
Falling short
However, it is disappointing that the Productivity Commissions have stopped short of recommending action on the issue of double taxation, perhaps the biggest unresolved issue for business in both countries.
Companies based in Australia or New Zealand with operations in the other country currently have their profits taxed twice, since neither country recognises the other’s system for offsetting tax credits.
This double taxation is an unnecessary financial burden on trans-Tasman business, and a system for mutual recognition of tax credits is needed.
The Productivity Commissions’ Report recommends generally removing investment restrictions to facilitate movement of capital, but stops short of recommending mutual recognition of tax credits, leaving it to the two Governments to decide.
Leadership needed
It is time for the politicians in both countries to show leadership on the issue.
We know that Prime Minister John Key is supportive of removing double taxation, and businesses would urge his engagement with his Australian counterpart to achieve this policy change.
We are on the eve of the 30th anniversary of CER and achieving this change in 2013 would be a fitting move towards a true single economic market.
Sustainable use of resources
We welcome the latest report for the Business Growth Agenda, Building Natural Resources.
The Government’s vision of improving the quality of our natural resource base while sustaining growth in key sectors are challenging and appropriate.
Our land, freshwater, farms, forests, minerals, marine resources and energy sources are the springboard for much of New Zealand’s wealth and will be the basis for a key objective of the Business Growth Agenda – growing exports to 40% of our GDP by 2025.
Key projects
This will require buy-in from all sectors of New Zealand as we take a sustainable approach to resource development.
It is an area where partnership is important. Businesses, Maori communities, central and local government all have a role to play separately and in partnerships.
Businesses support the approach of greening the whole economy, not just particular sectors.This means every business in New Zealand, small or large, can play a part.
BusinessNZ is ready to partner with others to urgently progress a number of projects to help unlock our natural resource wealth.
Our key projects should include (a) Developing indicators to measure progress on greening economic growth (b) Partnership projects with Maori business relating to natural resources (c) Support work alongside the ETS to reduce New Zealand emissions and (d) Integrating different capacity building programmes for business.
Innovative and sustainable use of natural resources should be the shared focus of businesses of all kinds, central and local government and communities as we seek to grow our exports and economy.
Phil O’Reilly is Chief Executive of BusinessNZ based in Wellington. The above are extracts from two different press statements. He was the guest speaker at the Indian Newslink Sir Anand Satyanand Lecture 2012 held at the Stamford Plaza Hotel on July 30, 2012. Website: www.businessnz.org.nz
