CTU Media Release

4 November 2011

Labour costings conservative

“The details Labour has released on its spending and revenue plans appear careful and conservative”, says CTU Economist, Bill Rosenberg. “If anything their expenditure plans underestimate the spending that will be required by any incoming government to reduce unemployment and address growing needs in education, public health and other areas. It does not mark Labour as a high spending government.”

“It is taking a different path to paying off debt, but their path is at least as credible than that of National. It is absurd to suggest there is only one way to get to that point.”

“We should also be very cautious regarding focussing all attention on debt. The threat of international recession should not be added to by a single minded focus on expenditure cuts. The experience in Europe is that cuts are leading to a worsening economic situation, and that should not have been a surprise. National’s contractionery budgets forecast for the next few years threaten the same in New Zealand, particularly if the reconstruction in Canterbury is further delayed, and certainly will not help to address its failure to reduce unemployment.”

Bill Rosenberg said “on the matter of debt, Labour’s plan doesn’t quantify one of its biggest advantages. The Crown’s net assets will be in a better position than under National. National may be reducing debt slightly more quickly over two years of the forecast period, but it will not be improving the Crown’s net asset position at the same rate because it is losing the SOE assets it is selling. National cannot pretend it will exchange them for other assets – the capital plans it says it will fund with the proceeds would be going ahead anyway. It is just funding them from reduced assets rather than increased debt.”

“This debate is portrayed as a competition around economic management. The fact is that all governments must deal with external economic conditions as they arise. Labour can say that its last nine years in power were not all good times, but it lowered debt and the unemployment rate throughout its term, leaving National to inherit a net government debt of just 6 percent, low unemployment and benefit numbers at the level National now says it wants to aim for in four years time. National has held office while New Zealand has gone through very difficult times, including natural disasters and global recession, though it was not hit as hard economically as many other OECD countries. There were better ways to bring New Zealand through those times which would have resulted in lower unemployment and less hardship for people on low incomes.”

ENDS

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