Five reasons why the Labour and Alliance Budgets donÆt add up
Sunday 14th Nov 1999
Rodney Hide
1. WhereÆs the missing $6 billion?
Labour was promising an extra $8.4 billion in 1996 over three years. Now itÆs
promising just $2.4 billion. Labour has not explained what policies have been
dropped to save $6 billion.
Alliance was promising an extra $12.4 billion in 1996 over three years. Now
its promising an extra $6.5 billion. Alliance has not explained what policies
have been dropped to save $6 billion.
2. Heroic growth assumptions
Labour (like the Alliance) assumes growth of over three percent a year. This
wonÆt happen with an 18 percent increase in the top rate of tax, a return to
union domination, and re-nationalising ACC.
3. Health cuts?
LabourÆs Budget increases Health spending by just $315 million over three
years. Treasury is allowing for a $534 million increase. What Labour is
promising is less spending than National but as a credit card commitment will
ôcut waiting times for surgeryö. It doesnÆt add up.
4. Tariffs make poor people poorer
The AllianceÆs ten percent across-the-board tariff will put up the price of
goods by ten percent. Low income people will have to pay more û for
everything.
5. Financial Transactions Tax wonÆt work
The Alliance assume that every dollar spent goes through the banking system
hundreds of times. This isnÆt so now, and will be even less so if AllianceÆs
Financial Transaction Tax was introduced. Ninety percent of all transactions
are performed by a small group of traders who can easily shift transactions
offshore. Big traders will switch from gross reconciliation to net. They will
also settle up less frequently. The Alliance Financial Transactions Tax will
raise less than ten percent of what the Alliance assume.
ENDS