Treasurer Bill English said today papers from Treasury showed that the Government needed to keep a careful control over new spending.

"Treasury's advice reflects the fact that in recent years we have been increasing spending by up to $1 billion a year. We have been slowing that down to reflect tighter financial conditions, but it does mean that spending increases will be smaller than they have been.

"The Government has got $600 million set aside each year as a provision for future initiatives as has been clearly outlined in the Budget documents. The papers from Treasury point out that over time there will be less available for new initiatives out of this provision because of normal growth pressures such as wage and cost increases. The papers say, however, that the tax reduction announced recently can be met within the Government's medium-term fiscal strategy, which aims for rising surpluses.

"In other words, if the Government is careful with taxpayers' money, it can share the benefits of growth by lowering taxes.

"However, Treasury's advice on the fiscal outlook means there must be questions about how Labour will meet all its promises as well as normal growth pressures.

"While Dr Cullen can pay for the promises he's costed, his colleagues continue to make new promises that haven't been costed. Saying that spending will be phased in does not get round the problem because it just means the pressure really comes on a year or two down the track," said Mr English.

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