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Farmers Urge Spending Restraint

18 December 2007

Farmers Urge Spending Restraint

Farmers implore political parties to be responsible and refrain from an expensive, inflation-stoking election-year bidding war, said Don Nicolson, vice president of Federated Farmers of New Zealand.

Mr Nicolson was commenting on today’s release of Treasury’s half-year update and the government’s Budget Policy Statement.

“The huge surplus unveiled today will tempt politicians to promise the earth so as to capture the voters’ attention. Obviously there is scope to cut taxes yet still leave plenty of room for investment in high priority areas. Expanding the size of government without robustly assessing the quality or necessity of this spending makes the Reserve Bank’s job to maintain low inflation impossible to do.

“Why does Dr Bollard’s constant call for fiscal restraint get ignored?

“Many farmers, especially sheep and beef farmers, are struggling with high interest rates, a high dollar, and cost hikes. Large increases in both central and local government spending have overly stimulated the domestic economy and made the Reserve Bank’s goal to contain inflation a lot harder. The result has been higher-than-necessary interest rates, which have been underpinning the high dollar.

“Farmers want all political parties to recognise that tax cuts are no more inflationary than government spending increases. It seems rich that some politicians have criticised tax cuts for being ‘inflationary’ while being quite happy to allow total Crown expenses to increase 72 percent since 2000.

“Federated Farmers wants all political parties to be responsible and ensure that its promises to cut taxes and/or increase spending will minimise inflationary pressures. For example, taxes can and should be cut – and in a meaningful way – but the rampant growth in government spending must at the same time be slowed.

“Finally, political parties must ensure that all their policies and programmes are consistent with improved productivity and competitiveness. Otherwise any chance we have to close the income gap with Australia is just a pipe dream.

“Federated Farmers will be making these points vigorously next year in its submission on the Budget Policy Statement,” said Mr Nicolson.

ENDS

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