National has not rebalanced the economy

David Parker
Finance Spokesperson

16 February 2012

National has not rebalanced the economy

The Government’s Budget Policy Statement confirms that its ‘strategy’ is to sell off New Zealand’s assets, does not address the fundamental problems with our economy, Labour’s Finance spokesperson David Parker says.

“The Government’s own advisors say that unless it makes structural changes to tax, savings and investment policies, New Zealand’s current account deficit will be $17 billion by 2016, funded by borrowing or asset sales. Our net liabilities to the world – the main reasons for New Zealand’s credit downgrades last year – get worse.

“Blaming others for the problems they have responsibility to fix becomes more difficult for second term Governments – they have already had three years.

“Three years ago National inherited very low Government debt from the outgoing Labour Government, which had reduced it from 37 per cent of GDP to 17 per cent - amongst the lowest in the developed world,” David Parker said.

“Finance Minister Bill English himself admitted at the time there was some fat: ‘In New Zealand we have room to respond. This is the rainy day that Government has been saving up for’.

“Since National came to office, however, Government debt has climbed – to $72 billion or 36 per cent of GDP – and is projected to grow by another $16 billion over the next two years, to $88 billion. No wonder Kiwis are nervous about the economy,” David Parker said.

“Reducing the Government deficit is important, but it is only part of the equation. New Zealand needs to export more than we import and pay in interest to overseas lenders. Every year we don’t pay our way in the world, we have a current account deficit.

“Every year the current account deficit has to be funded by the New Zealand economy borrowing offshore and selling New Zealand-owned land and business to overseas investors. National has no answer to this structural problem.

“John Key’s constant over-egging of National’s economic credentials, and his repeated slogans of a brighter future followed by repeated downgrades, are wearing thin. By 2016 National would have been in power for eight years, yet New Zealand will still be getting poorer. That is not success. Nor is it the bright future John Key promised

“Labour is determined to confront the fundamental problems with our economy that National will not address.

“Important reforms are needed. Tax reform, changes to monetary policy and savings and investment should be part of a plan to grow our exports and create a fairer and wealthier New Zealand.

“A more prosperous future is possible for New Zealand, if these issues are addressed,” David Parker said.

ENDS