12 September 2005

National – more flip flops than a dying fish

“More flip flops than a dying fish,” said Finance Minister Michael Cullen today of National’s latest policy u-turn.

“Until the weekend and a couple of bad polls, National was resolute that it would not reduce petrol tax because the revenue was needed for their roading programme.

“Now – suddenly – it is promising that a National government would cut excise duty for six months from 1 October.

“This is consistent with their strategy, contained in a leaked e-mail, that they should slosh those funds around and buy your way to the Treasury benches. But it is also precipitate, ill-considered, poll-driven decision-making and raises further questions about National’s credentials to govern,” Dr Cullen said.

“Is there now a policy that petrol prices should be held below a certain level? If so, what is the trigger point and how would it be maintained over the longer term?

“National’s claims that the higher petrol prices are producing a GST windfall for the government are simply not correct as two reports I released this morning showed.

“That is certainly the view of the Australian government as the following quote from Australian Prime Minister John Howard reveals: The extra money people have to spend to buy petrol is money they don’t spend on other items that probably attract the GST. So it’s unlikely that there is a huge overall increase in the GST take. You’ve got to allow for the fact that if somebody’s got say $500 a week to spend on petrol and eating out, or whatever, or buying something new, they have to spend more on petrol, they spend less on eating out and buying something new.

“This means that Don Brash is simply wrong to suggest that much needed roading projects would not be put in jeopardy.

“Second, National’s estimate that the cut would cost around $100 million seems to be dangerously light. Our advice is that the cost would be closer to $130 million.

“Third, National should explain why they are not planning to extend the relief to diesel users,” Dr Cullen said.

“National’s announcement today is typical of their short-term approach and their willingness to throw everything at getting into power,” Dr Cullen said.

ENDS

© Scoop Media