Cullen thinks inside the square
Cullen thinks inside the square to fully fund his Budget
“Michael Cullen knows that the “borrowing costs” for the 2006 year could be as high as $2.6 billion, and yet he continues to think inside the square by borrowing more money from overseas owned banks” said John Pemberton, Finance Spokesman for Democrats for social credit.
“The faceless few, the overseas shareholders of those banks, will continue to smile and reap the rewards because of the naivety of our Finance Minister and his inability to think outside the square” he said. “The Budget for 2007 ensures that we will continue to pay billions of dollars in interest.
Mr Pemberton noted that the Government is prepared to issue up to $1.0 billion in infrastructure bonds “to secure some cushion” to the funding of roading, rail and land transport. He noted that this is in addition to the $2.5 billion of bonds and the $200 million of treasury bills each week that the government requires to keep the ship of state afloat.
“The security for these issues is based on the ability of the government to tax us and thus meet interest and principal payments.
“The need for infrastructure expenditure is not argued, the method of funding it is” he said.
“By looking outside the square, Dr Cullen could re-activate the lending skills of the highly paid personnel at the Reserve Bank by instructing them to establish a revolving credit facility for the Government to use, to fully fund all of our infrastructure requirements.
“As demonstrated in the past, the cost of doing this is minimal. A mere 1% or less is needed to cover costs.
Mr Pemberton calculated that the proposed $1.0 billion bond, at 6.5% interest, could cost New Zealanders $65 million each year or nearly $2.3 billion over 35 years.
“The $1.0 billion sourced from our Reserve Bank would cost us just $10 million each year or $350 million over the 35 years at 1%” he said.
“Think again, Mr Cullen.”