Bollocks to Phil Goff and his rabble.
If they bothered to listen to the Budget speech – or had read the Readers Digest version set out in the Executive Summary – they would have learned:
The previous Government increased its spending markedly over recent years. In the absence of any policy response, the future path for Government spending, together with the weak outlook for revenue over the next few years, would result in permanent budget deficits and in Government gross debt rising from 20 percent of GDP to 70 percent of
GDP by 2023.
At 70 percent of GDP, the Crown’s gross debt would translate to around $45,000 for every New Zealander. Simply paying the interest on this debt would impose a huge cost on the New Zealand economy. The Government’s own borrowing costs would rise, meaning that less money would be available to fund public services. Future generations would be weighed down by a large debt burden.
The Government finds that outlook completely unacceptable…
A huge public debt of that magnitude was not foreseen when National was making its promises of tax cuts.
The recession’s impact has been much greater than Treasury was forecasting then, as we all know (or should know).
What’s more, we have had those Standard & Poor’s wallahs breathing down our necks, threatening to lower our credit rating. The effects of that would have been severe.
So it’s all very well, smugly saying – as Labour is saying – that it wouldn’t be in this positon because it didn’t promise more tax cuts.
Something had to be done in the light of the much worse economic circumstances. It was well signalled in the weeks ahead of the Budget. And then it was done.
Above the buzz from his electric toothbrush, Alf thinks he heard tax expert John Shewan say it was the responsible thing to do on Morning Report this morning. Shewan has been an ardent champion of tax cuts.
But it seems – like The Boss – he would put econonic prudence ahead of election pledges made in difference circumstances.