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Focus On Surplus Distracts from Failure On Rebalancing

11 April 2013

Focus On Surplus Distracts from Failure On Rebalancing

The National Government's singular focus on one measure of economic performance – returning the Government’s budget to surplus – is distracting attention away from their failure to rebalance the economy and create jobs, the Green Party said today.

The Financial Statements of the Government for the nine months to March 31, 2013 were released today and show that the Government’s deficit was $273 million lower than forecast due to tax revenue being $535 million higher than expected.

“The growth of Bill English’s record heap of Government debt is finally slowing, but there’s more to managing a smart, green economy than simply returning the Government’s annual budget to surplus,” said Green Party Co-leader Dr Russel Norman.

“National’s singular focus on fiscal surplus is a distraction from their wider failure to rebalance the New Zealand economy onto a more sustainable and job-rich path.
“New Zealand’s current account deficit is one of the biggest in the OECD, currently at 5 percent of GDP and growing. This compares to an OECD average deficit of 0.6 percent.
“As a country we are financing this deficit by borrowing and selling assets; we can’t keep living beyond our means indefinitely.
“Strong economic growth in the non-tradable sectors, such as construction and retail, is hiding the fact that the tradable sector is languishing under National’s economic management.
“A shrinking tradable sector combined with a strongly growing non-tradable sector means only one thing – increased borrowing, greater foreign ownership of our economy, and a further deterioration of the current account deficit.
“This is not a strong, sustainable economic recovery. Bill English has failed to rebalance the economy as promised.
Dr Norman was also critical of the failure of the National Government to implement a capital gains tax to assist with economic rebalancing.
“A tax on capital gains (excluding the family home) would help take some of the heat out of rising house prices in Auckland while simultaneously speeding the Government’s return to surplus,” Dr Norman said.
“A capital gains tax would drive much-needed investment from property speculation into the productive economy, further assisting economic rebalancing.
“The Green Party has the courage to develop solutions to address the deep structural weaknesses with our economy, delivering jobs and shifting our economy onto a stronger, more sustainable footing.”

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