A seven-point plan for regional development

Press, Volume CXIII, Issue 33252, 15 June 1973, Page 2

A seven-point plan for regional development

Trade and industry have been most affected by the Budget in the fields of regional development and export incentives, import licensing has not been greatly altered, except that the number of licences for the importation of built-up cars also assembled in New Zealand will be doubled immediately.

Regional development has been covered by a seven-point plan of Government assistance in loans, employee housing, and removal costs, as well as a selective freight subsidy. Interest-free loans will be available for plant and machinery, the loans being repayable only if the equipment leaves the development region within five years. The Development Finance Corporation will make available loans and loan guarantees for plant and machinery, bank overdrafts for working capital, and mortgages for buildings. The Government will also assist with employee housing, the establishment of industrial estates, and the cost of approved training programmes. "This assistance will be available on a selective basis and each case will be treated on its merits,” Mr Rowling said. “The money will be used to help those industries which have the greatest potential for future development rather than spread thinly with minimal effect." FREIGHT SUBSIDY The freight subsidy will also be applied selectively and only in those cases where other measures are not “more appropriate." Where the subsidy is applied, only manufactured products with a significant local content will qualify. Application of the scheme; will vary from region to region, but the Budget specifically includes products; leaving the West Coast and' South Island products that; cross to the North Island. “The basic rate for the ! subsidy will be 25 per cent of the qualifying freight i costs,” said Mr Rowling.! “There is provision for higher 1 rates in exceptional circum-i stances, but in no case will' the subsidy exceed "5 per; cent of freight costs of 5 ner< cent of the value of qualify-; inp sales.’’ Import-licence allocations have been increased by 5 per.

t cent in most cases, but the j allocation for built-up cars of makes assembled in New ‘ Zealand has been doubled. 1 The increased allocation is , in addition to the 110 per s cent incease over the 1972-73 I allocation announced in April. “The demand for new cars has been such that it has been decided to issue ® additional licences to assent- “ biers for a further 4500 builtg up cars in an endeavou to '■ overcome the present supply 1 difficulties,” Mr Rowling e said. The licences will be ' issued immediately. e ; Grants of up to 40 per cent r !of the capital cost of plant < iand machinery will be avail- ‘; able to industries designed to ’ achieve a high export perJformance. 3 The grants will be in the ' form of suspensory loans subjlject to interest at normal . i commercial rates, but the en- ' jtire loan will be written off J if 40 per cent of the output “{of the project is exported j 1 over any three-year period in J the first five years. ;i Projects qualifying for this! ' grant will normally be re-| ’ stricted to those with a capi-i J tai cost of not more than; $lOO,OOO. The grants will be assess-! able for income tax but for: , tax purposes will be spread ■over three years. They will J mot affect a’ recipient firm’s to claim investment allowances and special . and ordinary depreciation on j the total cost of plant and t equipment. A mortgage guarantee , I scheme to assist small and , i medium-sized firms which are exporting will be administered by the Development I! Finance Corporation up tol ' $lOO,OOO a firm. The existing export incen-l j tive scheme will be retained :|in its present form with the! ■(tax deduction remaining at; ;20 per cent of the increase! in export sales over the aver-: iage exports in the first three] | of the previous six years. However, the scheme will] be modified bv the exclusionj; lof unprocessed products, ex-i cent agricultural and horti-ii icultural nmducts, pending ah ■ review of the type of export*'

' assistance most applicable, i Seeds will not qualify for the ' scheme. Government assistance will i also be available for firms ■ tendering for or contracting I overseas undertakings which . would qualify as the export i of technology or skills. ; Up to 50 per cent of the ! pre-contractual expenses will • be met, repayable only if the • applicant obtains the coni tract. Further details of the ’ incentive scheme will be an- : nounced today. i The Export-Import Corporation will be set up soon to : provide extended services for : foreign trade, the Budget said. 1 “Its role will be to help to break into markets which have been difficult to penetrate and to place on the world’s market a greater range of commodities, particularly those made by small ' and medium firms. TAXATION INCENTIVES Taxation incentives which ■ will be retained in their present form for another year include: i Special depreciation allow- ! ances on employee accomimodation, new farm build-: ;ings, and certain facilities in] {hotels; and Development expenditure I on farming or agricultural land, and on rock oyster or mussel farms. Mr Rowling said there was] a second group of incentives due to expire on March 31, 1976. They would not be extended at this stage. Each would be studied by the Government. Concessions in the group were the 50 per cent additional deduction for touristi promotion expenditure and i additional depreciation on I ■capital expenditure to: {achieve hygiene standards in imeat export slaughter or , packing houses; buildings I used for storing or processing fish to achieve high stan(dards; cool-store buildings 'for export meat; and approved new tourist accommodation proiects. Some of these might be; affected by the outcome of] (the inquiry into the meat industry. Mr Rowling said. I