Press Release

ACT Delivers Response To Financial Turmoil
Rodney Hide MP
Wednesday, October 15 2008

ACT Leader Rodney Hide and Sir Roger Douglas were this afternoon briefed by Reserve Bank Governor Dr Alan Bollard, and will tomorrow deliver ACT's considered response to the financial turmoil sweeping the world.

"We have grave concerns about the Government's response to the turmoil, and some fundamental questions about the Deposit Guarantee Scheme," Mr Hide said.

"New Zealand has been in recession all year. The current account deficit is $14-15 billion, and the Government is forecasting a cash deficit of $6-$7 billion. That needs to be funded, and we sought Dr Bollard's view on how that money might be sourced and at what cost.

"Core government spending has increased more than $20 billion in the past 10 years, and is set to increase another $20 billion over the next three. We sought advice on whether the failure to guarantee inter-bank deposits will make it harder for New Zealand banks to borrow offshore.

"The pressure on households and businesses is unsustainable - a situation worsened by both National and Labour promising to spend even more. Now, more than ever, we need government spending under control and relief for households and businesses alike.

"Labour and National's knee-jerk responses are only making matters worse. John Key has taken to telling the Reserve Bank Governor to drop interest rates and is now telling the Cullen Fund managers when and how to invest. Muldoonism is back.

"Meanwhile, Dr Cullen is promising to spend more - if spending more worked, we wouldn't now be in recession.

"Following the briefing from Dr Bollard today, ACT will announce its fiscal recovery package at a 10:30am press conference in Parliament tomorrow," Mr Hide said.

ENDS

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