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Spending pre-election, cutting post-election

Labour
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"Voters should not be fooled by the Government's sudden burst of generosity. The pre-election spend-up will mean spending cuts post-election in the unlikely event National is returned," Labour finance spokesperson Michael Cullen said today.

Dr Cullen was responding to the announcement at the weekend of an additional $175 million in health spending for next year. The $175 million comes on top of an extra $20 million for Capital Coast Health and the Government's $6 million contribution to the Nelson Hospital redevelopment project.

"This is a big bite out of the $400 million dollar for dollar commitment offered by Bill English as a conscience salve to higher income earners for taking tax cuts when they know our social services are under strain and more and more people are falling through the cracks," he said.

"There are more announcements to follow. After nine years of piling costs on to students, National is now desperate to peg back Labour's lead in the tertiary policy debate. In a breathtaking piece of cynicism, it is expected to announce this week changes to the student loans scheme estimated to cost at least $44 million over the next three years.

"To that, we can add the $15 million ostensibly for the promotion of the Maori language, in fact to try to boost Tau Henare's dismal electoral prospects.

"Then there is the $47 million new spending in the "Bright Future" programme. This is a trivial amount given all the hype around the package - but it all adds up.

"Bill English admitted when he made the $800 million pledge - $400 million on tax cuts and $400 million in new spending - that it would run the budget quite close, especially in the first year. And that was before anyone knew we would be sending troops to East Timor.

"Labour supports the East Timor mission. But it will be costly and does reduce the scope for new initiatives.

"Not all the fiscal loosening is in the form of new spending. Some comes from spending cuts delayed for political reasons. An example is the cancellation midway through of the police review staff cuts to non-sworn positions.

"In the unlikely event that National can squeeze back into power, those redundancies will resume immediately as once again the razor comes out.

"Not only will National be seeking to recoup the money it has splashed out in election bribes, but it will also have to slash spending to accommodate the large tax cuts Act will demand as the price for its support.

"Act will be relentless on the tax issue. Rodney Hide has already claimed the inland revenue portfolio in a National-Act coalition and Richard Prebble has said tax will be on the agenda at every Cabinet meeting he attends," Dr Cullen said.

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