Hon Dr Michael Cullen
Minister of Finance
19 August 2005 Media Statement

National’s budget amateurish, unconvincing and dangerous

Finance Minister Michael Cullen today dismissed National’s alternative budget as amateurish, unconvincing and dangerous.

“Amateurish because it is not set out in a form which makes it comparable to standard budget presentations, unlike Labour’s in the 1990s.

“Unconvincing because it requires such savage cuts in so-called “low quality spending’ when anyone who knows anything about public finances knows that there is simply not that much fat in the system.

“Dangerous because it begins to quantify the price ordinary New Zealanders will pay for National’s tax cuts,” Dr Cullen said.

“National is planning to cut the $1.9 billion provision allowed for new spending in the 2006, 2007 and 2008 budgets to $750 million in 2006, $1.165 billion in 2007 and $1.155 billion in 2008.

“That would require big cuts to health and education services given the known pressures in these areas and would be insufficient to provide for any new wage and salary increases elsewhere in the public service.

“Because these spending targets are unrealistically low and could never be met, National’s promised tax cuts would set off an inflationary spiral and force the Reserve Bank to push up interest rates,” Dr Cullen said.

“National’s budget will not even allow it to meet its own spending promises, particularly in the area of law and order where the budgeted provision would not be sufficient to fund their promise to abolish parole,” Dr Cullen said.

“Current policies for the axe include KiwiSaver, the indexation of income tax thresholds and a large part of the existing Working for Families package.

“Even more concerning is that the projected surplus track is not sufficient to even meet contributions to the New Zealand Superannuation Fund so very quickly debt starts to rise again as a proportion of GDP.

“National’s inexperience and ingenuousness are painfully on display in its budget. The whole thing is an exercise in futility and a con,” Dr Cullen said.

ENDS

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