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Dumping Spending Cap Dangerous

21 May 2002

"Finance Minister Michael Cullen's suggestion that Budget spending caps should end shows the pressure he is under to rack-up Government expenditure," says National's Finance spokesman David Carter.

"A self-imposed spending cap is an extremely powerful public commitment by a Government to fiscal restraint."

Mr Carter says although Dr Cullen may not think he needs a cap to keep Government spending under control, National knows he does.

"Only last year, he couldn't keep within in his own self-imposed spending cap when he blew the Budget by $265 million. Just how will he be able to keep control of spending when he has no cap at all?"

Mr Carter says this year's Budget will show there has been fiscal slippage in the capital account.

"Dr Cullen can only have been talking about himself when claimed that: 'people found ways of juggling the figures so spending was not included within the limit'."

Mr Carter also adds that another worrying sign came from a recent OECD report, which expressed concern about the quality of Government investments in New Zealand.

"If we're serious about achieving higher growth in New Zealand the amount and quality of what the Government spends and invests is hugely important.

"Dr Cullen's signal that he no longer wants to have a cap on Budget spending is an underhand move and demonstrates his inability to control spendthrift ministers' intentions," Mr Carter concluded.


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