THE PRESS MONDAY, MAY 27, 1985. Promoting exports

Press, 27 May 1985, Page 20

THE PRESS MONDAY, MAY 27, 1985. Promoting exports

The Government’s measures to promote exports from New Zealand, announced on Thursday by the Minister of Overseas Trade and Marketing, Mr Moore, with some elaborating comments from the Minister of Finance, Mr Douglas, and the Prime Minister, Mr Lange, proved to be something of a mixed bag. Most significant are the decisions to extend the market development tax incentives and to establish a Market Development Board. The market development incentives had been due to end on March 31 next year. They will now be retained until March 31, 1987. In the meantime, consideration will be given to other forms of assistance after that date. The Export Market Development Taxation Incentive, to give the scheme its full title, enables an exporter to claim a tax rebate or a tax refund of 67.5 cents in the dollar for money spent on promoting New Zealand goods and services abroad. The type of expenditure that qualifies includes fares for international travel, hotel expenses, and the cost of market research. Normally, the rate of tax deduction would be 45 per cent; so the incentive allows half as much again. After March 31, 1987, the credit rate will be gradually reduced to 45 per cent over a period of three years. This scheme is separate from the Export Performance Taxation Incentive, which will be phased out by March 31, 1987. The devaluation last July was considered by the Government to have made the continued payment of this incentive no longer necessary. Exporters were being compensated because their prices would be more competitive abroad. The extension of the market development incentive is exceptional. The Government has been reducing all subsidies in the economy. Here it is actually extending one. Clearly, when the Government is trying to cut its deficit and to remove any subsidies which might distort the economy, some hard thinking must have gone on about continuing the incentive. However, the drive of the New Zealand economy has been towards increasing exports and increasing

value-added exports; so the Government appears to have been willing to bend the principles it has generally been applying to the economy. For the exporter, there is the advantage of the incentive itself, and there is also an advantage in knowing the Government’s intentions. The Market Development Board is intended to have a role in the strategic planning of New Zealand exports. It is likely to be dealing with the various sectors of the economy. The Department of Trade and Industry will continue to give advice to individual exporters from trade posts around the world. The board might enable firms to co-operate more fully in tackling a market and it will have a budget of $5 million a year, ample to employ a substantial staff. Its role will be both to advise and, to a certain extent, take action. Earlier, when the position of such a board was considered, one of the options put forward, and recommended, was that the Department of Trade and Industry be subservient to the board. Sensibly, this recommendation has been discarded. If the board shows initiative and enthusiasm, and succeeds in persuading business people of the merits of co-operation, a co-ordinated attack on certain markets may be possible. Care will be needed so that the board does not assume too many powers. Any exporter who thinks a firm can be successful in a particular market should have the option of using what the board, or the Government, has to offer, or leaving them both alone, if that is the preference. Interference by the board would be a nuisance to some exporters. Other measures that have been announced are mainly boosts to various bodies associated with exports and help for trade fairs. The boost to information services through the National Library is a sound move. Over all, the measures should keep the emphasis on exporting and should help New Zealand to perform better as an exporter. Without a better performance in selling abroad, the future for New Zealand is indeed bleak.