1 August 2008 Media Statement

National gets ready to spin $13 billion debt bill

With the National Party widely expected to begin arguing the case for a massive expansion in government debt at their conference this weekend, Finance Minister Michael Cullen has issued a list of words and phrases John Key and Bill English are likely to employ as they try to pretend they are not borrowing for tax cuts.

After committing a huge policy flip flop by pledging not to change the Working for Families programme – which Mr Key had previously attacked as middle class welfare – the National Party has come under pressure to reveal how their tax cut package will be funded.

“John Key’s flip flops have left him in a fiscal bind,” Dr Cullen said. “The only real answer is to whip out the public credit card to fund his election campaign spend up.

“Mr Key will try to pretend that his new borrowing programme will be for an ‘infrastructure revolution.’ But given that the Labour-led government is already delivering the largest road building programme in New Zealand history, the largest hospital building programme in history, the biggest energy infrastructure investment in more than a generation, and a revitalisation of the rail network, Mr Key’s ‘Great Leap Forward’ will be pure spin.

“John Key would borrow for tax cuts if elected, and he would pass the bill to our children. That’s just crazy.”

Dr Cullen said National will sell their borrowing programme by talking about:

- ‘leveraging’ the government’s balance sheet
- ‘scope’ for a ‘modest’ increase in borrowing
- A ‘responsible’ programme of borrowing
- Allowing SOEs to issue ‘infrastructure bonds’
- Central government ‘partnering’ with local government to fund infrastructure programmes
- Appointing a ‘Minister for Infrastructure’ to oversee the programme
- Public Private Partnerships
- Infrastructure as ‘future economic heritage’
- ‘Streamlined’ infrastructure programme
- ‘Investment principles’

Borrowing is already forecast to rise over the next few years, but without breaking the government’s goal of keeping debt at around 20 per cent of GDP. Lifting that target to 25 per cent would generate $13.3 billion available for extra spending.

ENDS

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