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Spending Wake-Up Call Welcomed

2 February 2006

Spending Wake-Up Call Welcomed

It is refreshing that some political parties are finally waking to the perils of rapidly growing taxation and government spending, said Don Nicolson, Vice President of Federated Farmers.

"At last year's election, the National Party promised large tax cuts and higher government spending. National was by no means alone or the worst offender with Labour also making very costly promises around student loans and Working for Families. Indeed, the 2005 election was notable for a lack of restraint by many politicians determined to out-do each other in the pursuit of votes.

"In this week's 'Orewa speech', Don Brash recognised what farmers and other business people have been saying consistently over recent years: that a growing tax burden and burgeoning government spending are damaging the economy.

"Between 1999/2000 and 2004/05, total Crown revenue rose by 61% to $67 billion, with tax revenue up 46% to $46.6 billion. This rate of revenue growth allowed total Crown expenses to jump 52% to $61 billion, with core Crown expenses up 34% to $46.2 billion.

"These numbers are so large they lack meaning for most of us, so I prefer to express them on a per person basis. Between 1999/2000 and 2004/05:

* Total Crown revenue per person leapt from $10,948 to $16,365.
* Tax revenue from $8,294 to $11,377.
* Total Crown expenses from $10,401 to $14,863.
* Core Crown expenses from $8,952 to $11,282.

"Worryingly, these trends are set to continue despite the slower economy. By 2009/10 total Crown revenue will reach $82 billion (or around $19,000 per person), with tax revenue up to $58 billion ($13,500 per person). Total Crown expenses will reach $77 billion ($18,000 per person), with core Crown expenses up to $61 billion ($14,000 per person).

"Falling farmer and business confidence and slower economic growth require an urgent rethink of Government policies and priorities. Restraining government spending and reducing tax rates would be a welcome signal to farms and other businesses that they can keep more of their hard earned money to invest in their businesses' productivity and competitiveness," said Mr Nicolson.

"Federated Farmers is an apolitical lobby group which is trying to make a better environment for farmers, other businesses, and, by definition, all New Zealanders. We will continue to point out where all political parties are working for - and against - the long-term interests of all New Zealanders," Mr Nicolson said.


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