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Kevin List's PM Presser Report

PM's Presser 24 May 2005

Key Signals Major Job Losses - PM Attacks Nats Tax Cut Plans

By Kevin List - Scoop Media chief reporter.

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Thousands of redundancies and a scaled-down state sector were hinted at by the National Party's finance spokesperson John Key yesterday.

While being interviewed on Auckland radio station BFM, regarding National's proposals to introduce a mini budget and tax cuts prior to Christmas should they win the upcoming election, Mr Key explained where he thought jobs could be pruned to finance the National's proposed tax cuts.

Mr Key stated that the core state sector had grown by 10,000 workers since National lost the 1999 election.

“Our point is really this - that we have hired thousands of extra people – they look for more work - that adds to more compliance costs and more difficulty in getting things done. So we, [the National Party] just do not buy into the argument that New Zealand needs that many core bureaucrats,” Mr Key told BFM.

Mr Key’s solution to this percieved problem of too many employees in the core state sector was redundancies.

“We are simply going to operate a core state sector with less people in it.”

When asked about Mr Key’s plans to re-organise the state sector, the Prime Minister defended the civil servants Mr Key was lining up to axe.

“You can’t have Government policy and funding which isn’t adequately resourced. We believe in a strong public health system. You have to back it with appropriate policy advice and officialdom. You can’t just let it loose and operate a health system, an education system and a transport system in a vacuum.”

The Prime Minister was of the opinion that, in Mr Key’s pursuit of tax cuts, he was likely to look further afield in the government sector than the 10,000-odd civil servants he considered surplus to requirements.

“I’m sure the man who has never cried will have no compunction about cutting nurses out of hospitals, teachers out of schools and kindy teachers out of kindergartens.”

Mr Key’s desire to prune back the public service recalls the purges of the early 1990s by Bill Birch, when a number of former employees were re-hired at great cost as consultants after being made redundant. Mr Key considered the use of consultants by Labour currently was similar to that under National in the 90s and saw the use of consultants as positive - comparing them on BFM to [bureacratic] SWAT teams.

“It is impossible for the state sector to recruit and pay for the kinds of people that you might want to go and fix up a problem,” he said.

When talking about firing people, Mr Key, who has had plenty of experience doing just that in the private sector, pointed out that it was important to do the job with “dignity”. While assuring BFM he would not be blazing a trail and firing people recklessly, Mr Key was definitely of the opinion the core state sector was overstaffed.

The basis for Mr Key’s belief stemmed from a report written by some of the 40,000 bureaucrats who Mr Key told BFM made up the core state sector and who in Mr Key’s opinion “congregated [mainly] in Wellington” – treasury officials.

These same treasury officials whose report Mr Key was brandishing as a weapon of mass dismissals had recently been assisting Finance Minister, Dr Michael Cullen, with last week's budget.

Dr Cullen’s latest budget has been received with firestorm of critical media coverage, particularly in the Australian-owned print media.

“I find the focus on the front pages of the print [media] really quite odd on the whole matter,” said the Prime Minister.

The Prime Minister seemed annoyed at the vitriol heaped on Dr Cullen’s budget, particularly from the Dominion Post and NZ Herald newspapers.

“The Labour Party offers business a quarter of a billion dollars in year one and signals a very important change to the indexation of thresholds out to the future, which has been reasonably widely applauded as a process, and we’re told we’ve lost our touch – I really find this a bit curious.”

What was interesting was the attention paid by all media to Dr Cullen’s decision to index inflation to income tax from 1 April 2008. This was a relatively minor part of the budget and has been leapt upon by one and all in the print media as a sign that Dr Cullens’s “tax cuts” are pathetic, because they deliver only 67 cents a week to the lowest earners and then not till 2008.

However the Prime Minister pointed out that the working for families package would put rather more money (up to $100) back into people’s pockets through its targeted tax assistance.

“It is also very clear that across-the-board tax cuts do very little for low-income people,” she said.

Despite the National Party constantly pointing to Australia as an economic blueprint for New Zealand to follow, the Prime Minister played down the Howard Government's recent multi-billion-dollar tax cuts.

"Comparisons have been made with the Australian budget, where very little ended up in the ordinary worker's pocket," she said.

While the opposition will look to keep damaging the Governments credibility on peripheral issues, it seems likely the battles for the voters' hearts and minds this election will be over tax and jobs. The Prime Minister considered the election would be a classic contest between the Labour Party and the tax cutting "Tories".

“What is now becoming clear is that we have a classic election between Labour and Tories... with a twist – that this Tory party, a 21st century Tory Party, wants to go back to the days of borrowing for tax cuts and probably cutting spending as well. The message will be very clear - if you want your mortgage to go up - vote for that!”


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