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Govt. concocting a yarn on its 'shortfall'

Bill English
Opposition Finance Spokesperson
Wednesday 3 May 2000

Govt. concocting a yarn on its 'shortfall'

The Government is concocting a story to try to explain away its shoddy pre-election budget planning, National Finance spokesperson Bill English said today.

"They are trying to claim that there is a shortfall of about $200 million in the Budget they inherited.

"In fact, we told them before the election that their figures didn't add up. They made too many election promises. Now they are discovering precisely that, and trying to make excuses.

"Under the strict disclosure rules we instituted, it's impossible and illegal to hide the books in the way Labour is alleging.

"Parliament passed the Fiscal Responsibility Act precisely to prevent the shonky books Labour left in 1990, and to stop governments using this hoary old excuse for not meeting pre-election commitments.

"The facts speak for themselves. In 1990 Labour left us an $89 million "surplus" which in fact turned into a whopping $2.6 billion deficit.

"In the pre-election fiscal update we projected a modest surplus of $14 million. Dr Cullen's BPS forecast a surplus of $400 million - that's $400 million more than he thought he had before the election. It's just laughable of Dr Cullen to say he hasn't got enough money for his initiatives.

"Are Trevor Mallard and Michael Cullen really trying to say that their own officials broke the law?

"In the Treasury's Pre-Election fiscal update published on 21 October 1999, the Secretary of the Treasury, Dr Alan Bollard, signed a Statement of Responsibility which is a statutory declaration under the Fiscal Responsibility Act

"The PREFU is the Treasury's independent legal view of the real state of the Government's books.

"Dr Cullen has referred publicly to a range of issues adding up to his alleged $200m shortfall; Police, Defence, CYFS, Arts, and IRD. All these were under active consideration by the previous government and the future costs and risks were well known to Treasury. (See for example attached table on police baselines)

"I warned Dr Cullen on 11 November 1999 that he had not allowed enough funding in his alternative budget for ongoing spending pressures over and above his election commitments.

"National made allocations for future spending of $600m, $1200m and $1800m for the next three years. The allocations were regarded by commentators and analysts at the time as credibly large to deal with ongoing spending pressure as well as new initiatives.

"Any government has to deal with considerable pressures on its finances and Dr Cullen and Mr Mallard are learning just how onerous their responsibilities are. The Government is learning how carelessly it raised expectations that it would spend a lot more money.

"Spending on police, defence social services and tax administration are always under pressure. Former Treasurer Bill Birch was well-known for being tough on spending, and he set challenging targets for government departments. If Dr Cullen can't meet those targets, that's his choice.

"If he can't do it with his extra tax revenue of about $1 billion, then he's really got a lot to learn," Mr English said.


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