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NZ seeks growth to lift economy from recession
AP - 27 minutes ago
WELLINGTON, New Zealand - New Zealand will cut taxes and increase infrastructure spending to help lift its economy out of recession, the government said Tuesday during the opening session of Parliament.
The new center-right government plans three rounds of tax cuts over the next three years _ the first from next April "to equip New Zealanders with some much needed extra cash in tough economic times," said Governor General Anand Satyanand.
Satyanand, reading a speech by newly elected Prime Minister John Key, said the government "will move quickly to provide much needed fiscal stimulus to the flagging economy."
New Zealand slipped into recession earlier this year for the first time in a decade, and the Paris-based Organization for Economic Cooperation and Development has warned that the economy will remain in recession through 2009.
While unemployment is expected to rise, the government won't respond by cutting spending and social support, Satyanand said. Workers hit by recession who lost their jobs will receive a "Restart" package of state assistance to give transitional relief.
"It will be going for growth because it believes in the power of economic growth to deliver higher incomes, better living conditions and, ultimately, a stronger society for New Zealanders," Satyanand said, adding that the government likely would run an operating deficit "for some years." This follows eight years of strong budget surpluses.
Tuesday's urgent session was called to pass the tax cut legislation and other changes to remove delays from the country's planning laws and cut "regulatory and compliance demands" seen as slowing economic development and growth.
The government also plans to review its recently passed Emissions Trading Scheme aimed at controlling greenhouse gas and carbon outputs.
New Zealand will honor its obligations under the Kyoto Protocol and work with other states to "find a pragmatic way" to include big emitters like China, the U.S., India and Brazil in future climate change negotiations, Satyanand said.
Critics have warned the review could damage New Zealand's international reputation as a leading advocate of reductions in harmful human activities that promote climate change.
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