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Nat's cuts will increase debt, poverty

8 October 2008

Nat's cuts will increase debt, poverty

Green Party Co-Leaders have called National's proposed tax a 'fake free lunch' which will increase New Zealand's debt and the gap between rich and poor, and suck resources out of research and science.

"Key pretends he has found a free lunch and will not increase borrowing, but this is a sham.

"National's proposals will increase New Zealand's debt, increase the gap between high and low incomes, make families with kids relatively worse off than others, and decimate funding for science, research and technology," Jeanette Fitzsimons and Dr Russel Norman say in their joint statement.

"Reducing saving by cutting KiwiSaver is the same as increasing debt. It won't show on the Government's balance sheet, because Key has swapped Government debt for private debt. Lower savings will show up on households' balance sheets as increased private debt, which is already too high," Ms Fitzsimons says.

"Funding tax cuts for people on higher incomes out of the science budget mortgages the future even more.

"A strong sustainable economy will be based on good science and research. They are currently underfunded. National wants to strip them even further.

"It is also a flip flop. Last Thursday, speaking to agricultural scientists in Hamilton, National announced that it would scrap the $700m Fast Forward fund for agricultural research and move some of the R&D tax credit for business to fund science directly.

"Now they plan to take the whole tax credit - $208m this year, and rising - for personal tax cuts. So under National, we will see our brightest scientists leaving for overseas as there will be no funding here for any new projects - and our economy will be robbed of the information needed to adapt to a quickly changing world.

"Most of the benefit of Key's proposed tax cuts will be felt by those on above average incomes. Even a one cent drop in the top rate is a big windfall for those earning half a million a year. Meanwhile families earning less than $14,000 will get nothing," Dr Norman says.

"It's all very back-to-the-'90s.

"Borrowing for more new roads will make our transport crisis worse, putting the country in debt for roads we don't need and won't be able to afford to drive on.

"In contrast, the Green Party would invest in infrastructure that will protect us from rising prices in the future - fixing up our rail system, improving public transport and making more affordable homes available."

ENDS

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