John Key - National Party Finance spokesman

19 January 2005

Govt spend-up puts pressure on mortgage interest rates

Dr Cullen's spending binge is raising the temperature on inflationary pressures at a time when the economy is already running hot, and mortgage belt New Zealand will suffer, says National's Finance spokesman John Key.

He is commenting on the release of the December quarter CPI figure.

"Dr Cullen is raising Government demand by $23 billion over successive budgets, oblivious to macro-economic effects in his pursuit of big Government nirvana," Mr Key says.

"An election year spend-up is the last thing the New Zealand economy needs with annual inflation sitting at 2.7%.

"Not only that, but he is continuing to load up business with higher regulatory costs.

"Anybody who bought a meal on a public holiday recently will have felt the inflationary effect of the Holidays Act, with increased costs being passed straight into prices. These will eventually find their way into interest rates.

"This is not a time to be ramping-up Government spending. Dr Cullen's 'pedal to the metal' approach to fiscal policy will only end in tears for mortgage holders."

Mr Key called for Dr Cullen to exercise spending restraint and return hard-earned taxes to ordinary New Zealanders so they can pay off their mortgages.

ENDS

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