Key praised for economic plan

The business sector has welcomed Prime Minister John Key's "relevant and timely" framework for economic recovery.

Mr Key set out the Government's objectives today, identifying years of poor productivity growth as a fundamental problem that has to be faced.

He told a business meeting in Wellington New Zealand's productivity was growing much more slowly than most other countries and the tradeable sector - the main exporting industries - had effectively been in recession for five years.

"We like to think of ourselves as a trading nation, yet we export less as a percentage of GDP than many other small OECD countries," he said.

"That percentage has only grown slowly over the last 30 years. Over 90 percent of our exports come from just under 5 percent of exporters, and these exports are also very concentrated in a few sectors."

Mr Key laid out six policy areas the Government was focused on: regulatory reform, investment in infrastructure, better public services, education and skills, innovation and business assistance, and a world-class tax system.

"The Government has a comprehensive plan, not just for managing through the current recession but also for improving the fundamentals of the New Zealand economy," he said.

"The six policy drivers I have outlined will help to create an environment that allows businesses to thrive."

Mr Key went through the six policies in detail, later telling reporters "I'm going to focus on all the component parts that can make New Zealand more productive, a stronger exporting nation with higher wages".

Business New Zealand chief executive Phil O'Reilly said the sector had wanted the Government to set out a framework that would provide certainty for businesses that wanted to get on with their productive endeavours.

"In particular, business wanted to see commitment to innovation and skills that are vital for lifting New Zealand's economic performance and it is positive to see that commitment made today," he said.

Mr Key said Reserve Bank Governor Alan Bollard's comments yesterday about New Zealand coming out of the recession were in line with what he had been privately telling ministers.

"I think that tallies ... we're starting to come out of the recession which is good news," Mr Key said.

Asked whether he thought the worst was over, Mr Key replied: "It feels a bit like that from an international perspective but the Government has a huge task in front of it."

Labour's finance spokesman David Cunliffe said Mr Key was offering no plan to boost the economy and keep people in jobs.

"With more than 1200 New Zealanders joining the dole queue every week, John Key needed to outline his plan, yet all we got was a rehash of National's election promises," Mr Cunliffe said.

The incoming National Government had undermined its strategy by cutting funding from New Zealand Trade and Enterprise grant programmes, axing research and development tax credits and other cuts.

Mr Key had talked about increasing savings rates, but National had reduced its effectiveness, Mr Cunliffe said.

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