December Update Confirms Economic Difficulties
The Government's December Economic & Fiscal Update, released today, confirms the country's economic difficulties have been real and not imagined, said ACT Finance spokesman Rodney Hide.
"The Update reveals that $400 million has been wiped off the budget's forecast tax revenue for the year. This is more than the extra revenue the Government claimed would be raised by the tax increases. The 39 cent tax hike, as ACT predicted, has yielded no extra revenue.
"The Government now says real economic growth in the last two quarters of this year will average just 0.5%. This is pathetic. The last two quarters of 1999 saw real growth averaging 2.3%." Unemployment projections for 2001 have been revised upwards, from an average of 5.8% (in the budget) up to 6.1% of the labour force.
"The problem is plain. This Government launched an all out assault on private enterprise. That has depressed the economy and now the Government’s budget is tight.
Government departments should especially note Dr Cullen's warning that "some sectors will receive no further funding in Budget 2001." To make this assertion, this bold and this early, when inflation is picked to nudge 4% for the year, is a dire warning indeed.
"The Update suggests that core Government services, law and order, and defence, will be particularly hard hit, with significant cuts in the level of real funding planned for 2001/02.
"I expect that Minister’s are telling all their departments that there is simply no extra money available. Contrast this with Dr Cullen's rosy economic stories, and it doesn't take a Treasury analyst to figure out that something doesn't add up.
"ACT calls on Dr Cullen to be up front about which sectors will not be receiving further funding in Budget 2001, and which will have cuts in their real levels of funding,” said Rodney Hide.