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Borrow and hope Brash returns

7 June 2006

Borrow and hope Brash returns

The National Party is returning to its misguided election promise of borrowing to fund tax cuts, Finance Minister Michael Cullen said today.

"National's latest postcard campaign just peddles the same Mickey Mouse economics of borrow and hope that failed previous National governments.

"Dr Brash wants 85 per cent of taxpayers to pay a top tax rate of 19 per cent or less. According to Treasury's ready reckoner that would cost about $2.2 billion a year.

"And he thinks there is a $9 billion surplus to fund them. Dr Brash seems to forget we are already borrowing over the next four years to fund cash deficits.

"The reality is, National's tax cuts can only be afforded by borrowing and cutting services – it means fewer teachers, fewer nurses, fewer police and a rising interest bill for future generations.

"Dr Brash is trapped in a dream world where you can have first class public services and multi-billion dollar tax cuts. In the real world there are serious trade-offs.

"The Labour-led government has succeeded in reducing gross sovereign issued debt from 35 per cent of GDP in 1999 to slightly over 20 per cent today. That's why we are the envy of so many developed countries. We are future proofing ourselves against the demands of an aging population.

"In fact, credit rating agency Standard & Poor's today said our debt reduction success meant we were "one of the best placed nations to deal with aging."

"Dr Brash is prepared to sacrifice all that.

"He is also ignoring the latest Colmar Brunton poll which found 75 per cent of people preferred spending on health, tax relief for working families, roads, superannuation and interest free student loans to tax cuts. And that's precisely what this government is delivering.

"As a former governor of the Reserve Bank he should know better. He would rather borrow to fund consumption today and send the bill to future generations.

"Dr Brash wants your kids to pay for your tax cuts."

ENDS

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