07 June 2006 Media Statement
National's offshore borrowing to fund tax cuts would deliver Standard & Poor downgrade
International ratings agencies are warning that proposals to significantly increase the government's levels of overseas
debt, in order to fund short-term tax cuts for high income earners with no children, would risk a downgrade to the
country's credit ratings.
"Families with mortgages should be in no doubt about the consequences of the warnings contained in today's Standard & Poor's analysis that shows that the ageing of New Zealand's population could see New Zealand's excellent credit rating
savaged if combined with bad government policies," says Progressive leader Jim Anderton.
"Bad policies - like increasing overseas debt - combined with the ageing profile of the population, could quickly undo
all of the good work to future- proof our economy with the New Zealand Superannuation Fund, KiwiSaver and strong fiscal
surpluses of the Labour-Progressive government," he said.
"The government's accounts show clearly that there is not one cent available to deliver National's election tax
cuts-for-the-childless-rich bribe.
"In fact, after taking account of our investments in the NZ Super Fund, tertiary education improvements and transport
funding increases, the government will actually be running cash deficits in each of the next few years.
"There is only one way that National and its allies could cut taxes: by putting out the begging bowl to Japanese and
Belgian housewives and other overseas investors looking to make a quick buck by lending us the money at very high rates
of interest.
"But the cost would be much higher borrowing costs for every small and medium sized business in the country, rising
unemployment and higher and higher mortgage financing costs for every working family in the country for years to come,"
he said.
ENDS