John Key MP National Party Deputy Finance Spokesman

22 June 2004

Treasury condemns Budget as 'ineffective'

National Party Deputy Finance spokesman John Key is accusing the Government of deliberately misleading taxpayers with its public statements about the Budget.

New Treasury papers released today back National's claim that Michael Cullen's Budget will be ineffective in delivering on its key target of 'making work pay'.

"Senior members of Cabinet have repeatedly misled the public by claiming that Budget 2004 is about making work pay," says Mr Key.

"It's clear from international research and the Government's own advice that high effective marginal tax rates have the opposite effect and Labour Ministers knew this all along," says Mr Key.

Reports today suggest only 2% of sole parents will move off benefits and into work, and there will be no net change for couple families.

"These Treasury papers make a mockery of Labour's claim that the Budget was about helping people into employment.

"The Budget offered nothing to four out of five Kiwi households and in some cases it will see families earning $40,000 a year getting the same as those earning $60,000 after Government top-ups are included.

"Even the Labour Department advised Cabinet that the package would reduce incentives to work for middle income families.

"The officials were clearly under-whelmed by the package.

"The Government is already erecting new barriers to employment through the Holidays Act and the Employment Relations Bill - these papers show the Budget provides next to no relief from that.

"National believes taxpayers should have been rewarded with a Budget that recognised hard work and helped make work pay," says Mr Key.

ENDS

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