Regulatory standards law hopes dashed

BusinessNZ chief executive Phil O'Reilly has expressed disappointment that a major piece of legislation freeing businesses of red tape appeared to be dead and buried.

"Although the Government has a political mandate to proceed in a number of areas with support from its coalition partners, it is disappointing that a key building block of a competitive economy has been allowed to fall off the back of the truck, as it were."

The somewhat insubstantial agreement between National and Act New Zealand to enact a Regulatory Standards Bill gave the impression that to all intents and purposes the Bill was dead and buried, he said.

"This is extremely unfortunate given that improving the quality of regulation is fundamental to improving long-term competitiveness in the same way as transparent and sound monetary and fiscal policies."

BusinessNZ released its planning forecast on Monday which said the local economy was tainted by global uncertainty.

Several indicators were pointing to lower growth projections than previously forecast.

Significant volatility in international markets would continue into the future as politicians and decision makers tried to make progress in the face of resistance from their constituents.

Mr O'Reilly said that on the positive side, New Zealand's key trading partners were still performing satisfactorily. That boded well for steady, but not spectacular growth over the medium term.

Several indicators showed that non-OECD countries were providing the backbone for reasonably robust world growth projections while most OECD countries continued to languish, he said.

The BusinessNZ economic conditions index sits at two for the December 2011 quarter, up one from the previous quarter but down two on a year ago.

In a separate publication, the New Zealand Institute of Economic Research consensus forecasts showed the New Zealand recovery would be slower than previously thought.

However, the economy was still expected to grow 2.2% in the year ending March 2012 before accelerating to 3% in 2013.

The reconstruction of Christchurch would be a main driver, with the rest of the economy growing more modestly.

The forecasts say a darkening global economic outlook and a later rebuilding in Canterbury were the two main reasons for a weaker economic outlook.

"A weaker global backdrop and a high exchange rate will see only slow export growth. Domestic demand will also be slower. As a result, new jobs and living costs will rise modestly."

Households would spend less and businesses would be cautious about investing more, the forecasts said.

A weaker economy and subdued inflation meant economists now expected the Reserve Bank to raise interest rates later and more gradually.

Slow economic growth meant tax revenue would be lower than previously thought. There would be a fiscal deficit of $1 billion in the June 2014 year, compared to a forecast surplus of $1 billion in the survey three months ago.

Contributors to the forecasts were ANZ-National Bank, ASB, BNZ, Deutsche Bank, First NZ Capital, Goldman Sachs, NZIER, Reserve Bank, the Treasury, UBS and Westpac.