ACT Finance spokesman today slammed Michael Cullen’s first Budget for offering the country no direction or vision for the future. “Michael Cullen promised a “New Start” with his Budget but has utterly failed to provide any leadership, direction or vision.

This is a lolly-scramble Budget. Michael Cullen has doled out the cash but has provided no clear policy direction. His Budget is a ‘False Start’. The difficulty with this lolly scramble is that it’s New Zealand householders and New Zealand businesses who are paying for it. “There are six key things wrong with the Budget:

1. The Budget lacks a clear strategic direction The Budget provides no clear path for how to achieve its apple-pie goals leaving the country with no clear sense of direction. The Budget thereby fails to provide confidence in the government or the economy.

2. The Budget fails to provide a sound policy framework for business and jobs The new government has adopted policies that are anti-business, anti-jobs and anti-growth. The Budget simply throws a few dollars at business these will prove no substitute for sound and credible economic policy.

3. The Budget forecasts don’t stake up The Budget forecasts assume renationalising Accident Insurance, abolishing the Employment Contracts Act and of increasing income tax have no impact on jobs, investment or economic growth. The rosy outlook is based on the previous government’s economic policy – not this new Government’s.

4. The Budget’s strategy to “close the gaps” is flawed The Budget fails to address the fundamental problem that the welfare/tax system traps people into a poverty trap that perpetuates disadvantage. It does nothing to change the disincentives to take a job and, in fact, with the removal of the community wage makes the problem worse. The Budget simply throws more money at social problems – this hasn’t worked in the past, it won’t now.

5. The Budget fails to detail how superannuation is to be paid for in the future

Michael Cullen boosted superannuation with the promise of a “pre-funded” scheme, but his Budget provides scant explanation of what the policy of funding superannuation into the future is. Super policy is limbo.

6. The Budget shows Government’s failure to reduce student debt Free interest for student loans has not reduced student debt as promised. As expected the Budget shows student debt to have gone through the roof. The total debt was to increase for the year by $260 million but is now to increase by $557 million (BEFU pp40, 114). This is a massive increase in debt uptake of 113%. The policy has failed.

“The Budget fails any rigorous test because it is all about throwing out the lollies instead of providing a clear policy framework for business, jobs and growth. This is an F Budget for Dr Cullen – a Budget that fails,” said Rodney Hide. ENDS

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