Rt Hon Jenny Shipley
Leader of the Opposition
Monday 27 March 2000

S & P's warning shot well-timed

Standard & Poor's has sent New Zealand a warning: the Labour-Alliance's policies risk doing real damage to the country and its people, Opposition leader Jenny Shipley said today.

"The rating agency's negative outlook accurately charts the dangerous waters ahead," Mrs Shipley said.

"This is what Standard & Poor's had to say:

"The outlook reflects the risk that the Labour-Alliance, which lacks a Parliamentary majority, will not meet its target of keeping the operating budget in surplus over the economic cycle. The Government's more interventionist micro-economic stance likely will make the labour market less flexible and could depress growth prospects. Its policies thus could impair the country's ability to attract overseas equity inflows critical to funding the high current account deficit and keeping private sector leverage in check. New Zealand's corporates receive few subsidies and its banks are largely foreign owned. However, a ratings downgrade could occur if the budget shifts into deficit, or if the Government lends material support to the private sector should there be any signs of financial distress."

"This is precisely what National has been warning. It's ironic that this warning shot has come precisely as today's growth figures confirm what can be achieved under National's policies.

"Labour's policies will hurt jobs and families and interest rates. It's a shame the Government needs an international credit agency to tell it that - and still probably won't listen," Mrs Shipley.

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