Hide attacks Cullen for hiding huge surplus

Wednesday 16 Mar 2005

Rodney Hide - Press Releases - Taxation

ACT Leader Rodney Hide stepped up his attack on Dr Cullen for trying to hide Labour's unprecedented operating surpluses in an attempt to silence mounting calls for tax cuts.

In Parliament today Mr Hide questioned the Finance Minister on the advantages of accrual accounting over cash accounting. He also accused Dr Cullen of cooking the books to bury the surplus, comparing the change in presentation of the Crown accounts to what the previous Labour Government did to hide its shameful deficit in the 1990 Budget. In his response, Dr Cullen pointed to the only difference being that one was a surplus and one was a deficit.

After question time, Mr Hide said Dr Cullen is repeating former Finance Minister David Caygill's 1990 accounting declaration that forestry asset sale income was revenue. Back then Labour was cash accounting to hide the deficit. Now it's to hide the true extent of the surplus.

"If the Crown tomorrow sold all its electricity generating companies, solid energy, and TVNZ, the resulting cash surplus would be close to $10 billion. Reporting such a cash balance would not present a fair view of the health of the Government's accounts for that year, but it's this method of cash accounting that the Government is now promoting.

"It's outrageous that Dr Cullen is reverting to shoe-box accounting, deducting from the operating surplus all the capital items and advancing all the student loans and super fund contributions."

Last month Dr Cullen said `After a five year struggle I am about to give up as lost the effort to educate the media on one of the basic questions of third-form accounting: What is cash?'

"This is no education in accounting. This is a political exercise designed to plead government poverty and say there's no money for tax cuts. We will not be fooled by this sham nor will others.

Describing it as `pulling the wool over our eyes', BNZ chief economist Tony Alexander has been scathing of the Government's attempt to hide its over flowing coffers: `Treasury are probably engaging in the biggest smoke and mirrors exercise we have seen from them since 1990, he said in his weekly report last year.

"ACT will fight this sham all the way to the May 19 Budget. Whatever the smoke and mirrors, the reality is we have a huge surplus that belongs to hardworking New Zealanders not Dr Cullen. It's time Labour boosted working Kiwi's incomes and not deny them through deception," said Mr Hide.

ENDS

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