Dr Cullen is pushing the line that Labour are being fiscally prudent as the books are opened by the Reserve Bank today to reveal no money in the kitty, a deficit for the next 10 years and rising unemployment.
This fiscal prudence includes:
We always knew the books would be bad, and the Reserve Bank had their figures done before the impact of the American melt down was known, and Cullen had boasted that Labour had cleared out the kitchen cupboard during is last budget. There's been no fiscal prudence, it's just typical Labour cheek trying to claim the good and blame others for the bad.
This fiscal prudence includes:
- Announcing 10.5 billion in tax cuts over the next 4 years
- Starting the tax cuts one month before the election instead of the new financial year
- singing up to an expensive Emissions Training Scheme (ETS) to the tune of 1 billion dollars
- bringing forward an increase in Working for Families benefits, just in time for the election
- massive expansion of the public service, rents, executive pay packets and everything else that goes with this
- purchase of the NZ Rail system, with expected expenditure of 1.2 billion in the next two years
- a series of expensive high profile vote winners such as the so-called "free childcare" and interest free student loans.
- The government has gone quiet on the results of spending excesses such as Te Wananga where over $500 million dollars was gobbled up over a few years before the wasteful spending was exposed.
We always knew the books would be bad, and the Reserve Bank had their figures done before the impact of the American melt down was known, and Cullen had boasted that Labour had cleared out the kitchen cupboard during is last budget. There's been no fiscal prudence, it's just typical Labour cheek trying to claim the good and blame others for the bad.
It certainly makes it tough for the next government. We all want tax cuts, but Labour has well and truly emptied the piggy bank and taken out a mortgage on the broken remains.
ReplyDeleteThis is where things get interesting and ideology is tested.
ReplyDeleteTax cuts can help minimise the shock to the economy, but I suspect a left wing government not understanding this would only manage to improve things by fluke.
Now's the time to consider major tax reform, including dropping both income and company tax rates.
We could introduce capital gains tax (excluding the family home) and sorting out some of the irregularities over trusts as vehicles to avoid tax. Lower, flatter taxes result in less avoidance anyway.
We could revisit the growth in government departments, cap growth for the first term and work out next steps during the first term.
The discussion is huge, and the empty cupboard gives good reason to table some of these ideas.