24 May 2005

National’s sums don’t add up

The National Party has to be planning cuts to the core public service or else it won’t be able to afford large scale tax cuts, says the Public Service Association (PSA).

Claims in the Dominion Post this morning by National’s finance spokesperson John Key that ‘frontline’ public servants would not lose their jobs to fund a significant tax cut package either signal the party is misleading voters and does intend axing jobs in the education and health sectors, or its tax cuts package will be very small and tightly targeted to those on higher incomes.

PSA National Secretary Brenda Pilott says it is time for National to provide policy details so voters can assess for themselves whether the party’s tax cuts package is credible.

“With a general election four months away at most it is time for National to provide the details which support its claim that tax cuts can be afforded without cutting in to the core public service.

“Any meaningful tax cuts package, which both Dr Brash and Mr Key say National would deliver before the end of the year, would cost many hundreds of millions of dollars, if not billions, each year. We know for example that tax cuts to those on low incomes costs $215 million for every cent off the current rate. National’s comments to date suggests it is promising more than a few cents in the dollar off the bottom tax rate – but how is this affordable?

“The talk of a burgeoning Wellington-based bureaucracy is simply not credible. The two examples regularly bandied about by the National Party do not stand scrutiny: the Ministry of Education has not doubled in size – it has absorbed the staff employed by the formerly independent Special Education Service (2171) and the Early Childhood Development Unit (65), and the Tertiary Education Commission is almost entirely composed of staff previously employed by the Ministry of Education and Skill New Zealand.

“Voters will also well remember the chaos that reigned by the end of the 1990s because the public sector was cash starved – for example the failure of the student allowance processing system, or the inability to get an result on election night in 1999. Across the public sector gaps were often patched up by consultants who did not need to be counted as part of the core staff, despite them doing ongoing work often at a greatly inflated cost.

“The only way to generate the large savings that would be needed to fund a substantial tax cuts package would be to lay off thousands of workers in the core public sector – social workers, nurses, teachers and the like. National needs to be clear whether this is what they are promising New Zealanders,” Brenda Pilott said.

ENDS

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