Productivity report out tomorrow

Sun, 29 Nov 2009 8:39p.m.

A report out tomorrow on ways New Zealand can catch up with Australia is expected to recommend a flat tax and limitations on who gets interest-free students loans and early childhood education subsidies.

The 2025 Taskforce report -- named for the date the Government aims to catch up with its trans-Tasman neighbour by - will report at midday on its work into ways to increase productivity and close the wage gap with Australia.

It is headed by former National Party leader Don Brash, who was also a Reserve Bank Governor.

New Zealand wages are about 30 percent lower than Australia's. Also, New Zealand's productivity has grown at about 1 percent for the last decade, which would need to increase to 3 percent a year to match Australia's rate.

One News tonight reported sources had told it that the report would recommend replacing the top tax rate of 38 cents in the dollar and business rate of 30 cents in the dollar with a top tax rate of between 20 and 25 percent.

The report was expected to recommend against a capital tax but argue for limitations on some universal benefits. Those included interest-free student loans and subsidies for early childhood care education.

Prime Minister John Key said the Government would not break any of its election commitments, which included retaining those benefits.

NZPA

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