Tax cuts irresponsible
"A decision to proceed with tax cuts by the National Party conference this weekend would be grossly irresponsible and evidence of political desperation in light of trade data for May showing continuing weakness in New Zealand's external accounts," Labour finance spokesperson Michael Cullen said today.
"The May merchandise trade balance shows a surplus of just $73 million. This is a significant deterioration on last year's figure of $306 million and on the 1990s average of $295 million.
"Even more worrying is that the figures show exports are still declining on a trend basis while import growth is still surging ahead.
"This virtually guarantees a credit downgrade post-election from credit rating agency Standard and Poors which has already placed New Zealand on negative credit watch. But it also carries serious implications for National's tax cutting agenda.
"The big factors behind the deterioration are low commodity prices on the one hand and increased car imports and household spending on the other," Dr Cullen said.
"Car imports are up $55 million against May last year and household spending is up $48 million. To further fuel consumption by throwing tax cuts into the mix will only aggravate the problem.
"National must know this. The issue is whether they will have the courage to act on it or whether they will risk economic sabotage for narrow political advantage."