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Clark caught by borrowing boomerang

Bill English MP
National Party Finance Spokesman

6 August 2008

Clark caught by borrowing boomerang

National Party Finance spokesman Bill English says Helen Clark’s hysterical reaction to National’s plan to significantly boost infrastructure investment with a prudent programme of debt management has come back to bite her.

“Helen Clark’s rush to make an opportunist attack on National has rebounded badly on her, since it turns out that when debt was at more than 50% of GDP she was advocating an increase to build more infrastructure.

“She knows, and Michael Cullen knows, that New Zealand does not have a debt problem, it has a growth problem. National’s plan to boost infrastructure will help remove some of the bottlenecks in our economy and improve longer term growth.”

Mr English says one of Labour’s first acts as a Government was to increase the target debt to GDP ratio by 5% from 25% of GDP to 30% of GDP. National's plan is to increase target debt by a modest 2% to 22% of GDP.

In June 1994 Helen Clark said ‘the Government is putting an undue emphasis on debt repayment at the expense of our failing services and infrastructure in New Zealand’.

Mr English says that makes the Prime Ministers attacks on National for a prudent programme of borrowing for long-term assets hypocritical.

“What she’s telling us is that it was okay for Helen Clark to talk about borrowing more when debt was more than 50% of GDP, but it’s not okay for National to say we’ll look at a small increase in borrowing to relieve some of the pressure on our groaning infrastructure.”

Mr English says right through the 90s Helen Clark was an advocate of borrowing, when the debt to GDP ratio was far higher.

“It all shows that she is guilty of blatant opportunism in her attacks on National’s sound and sensible investment strategy.”

Helen Clark on borrowing in the 90s

“Of course, there is good reason to have a programme to reduce the national debt but it is not appropriate to put all the gains from growth towards that objective,” – Helen Clark Address in reply (March 1994) Countrywide Banking Corporation Limited Bill

“The Government is putting an undue emphasis on debt repayment at the expense of our failing services and infrastructure in New Zealand,” - Helen Clark (June 1994) Opening address to the Massey University Winter Lecture Series.

“We agree that we should be aiming to ensure that the ratio of debt to GDP in New Zealand is not out of line with other smaller industrialised countries. But Labour does not accept that having the smallest debt to GDP ratio in the OECD is an important goal. Nor do we believe that reducing our debt quickly should take precedence over improving the living standard,” – Helen Clark (July 1994) Speech to Northern South Island Labour Regional Conference.

“We agree that it would be desirable to be paying less than ten per cent of annual crown revenue on interest by the end of the decade… We agree that we should be aiming to ensure that the ratio of debt to GDP in New Zealand is not out of line with other small industrialised countries. But Labour does not accept that having the smallest debt to GDP ratio in the OECD is an important goal,” – Helen Clark (June 1994) Waikato Labour Regional Conference.

“At Budget time our net public debt was equivalent to 42 per cent of GDP – down from 48 per cent a year earlier… Given those figures, it is hard to believe that the international credit rating agencies with which the Government is so besotted can have any real concern at our current level of debt,” - Helen Clark (June 1994) Waikato Labour Regional Conference.

“The Government is obsessed with debt reduction over all other needs for spending,” – Helen Clark (July 1994) Speech to Wellington Labour Regional Conference.

“Labour’s debt reduction objectives are set at a lower, but still prudent, level because we believe it is important to meet other pressing requests for resources,” – Helen Clark (May 1995) Speech to NZ Employers Federation Conference.

“I am pleased that economic growth has produced enough tax revenue to declare a surplus and repay debt. But I am appalled at the rate at which debt repayment is occurring at the expense of families, and schools and other essential social and public services.” – Helen Clark (July 1994) Speech Auckland Labour Regional Conference.


ENDS

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