Budget 2008—Cash Deficit Forecasts

Hon Dr MICHAEL CULLEN Link to this

I have seen a report indicating that neither changing economic conditions nor fiscal imperatives should make any difference to plans for major reductions in Government revenue. At a time of considerable international instability, when two Australian-owned banks operating in New Zealand have just made major write-downs and when the US Government has just announced the biggest fiscal deficit in America’s history, it is extraordinary that somebody should take a short-term money market manipulator’s view of the management of the New Zealand economy. It is no wonder that on TV3 last night, when Mr English was trying to deny that borrowing would be required for further tax cuts, he lifted his eyes to the heavens and said: “I had better not comment any further.”

Hon Dr MICHAEL CULLEN Link to this

The member may make it up as often as he likes, and he always does. Every Budget that I have presented—[ Interruption] the one thing about this sound system is that the person in control gets heard, and the squeaking does not get heard—has shown surpluses turning into deficits over time, the economy continuing to outperform, and, therefore, cash surpluses continuing to eventuate. Anybody who believes, in the current international and domestic situation, that the Budget forecasts will be better at election time than they were at Budget time is living in a dream world. That member knows that the promises being made by his leader up and down the country cannot be met without either further borrowing or without making cuts to State spending—and we know one of the ways that those members will do it.

Hon Dr MICHAEL CULLEN Link to this

I have seen an even further extraordinary report that commits to keeping the entire Working for Families package and goes on to suggest that this should have no impact on the affordability of tax cuts of $50 a week over and above the $10.6 billion of tax cuts announced in Budget 2008. This report from Mr Key, who previously described Working for Families as “communism by stealth”—[ Interruption] Oh, it was actually communism by stealth, he says. He says that it was communism by stealth, but if a National Government did it, then presumably it would be capitalism by stealth. If it was communism by stealth, and if it was a costly welfare monster, it shows, in fact, that the National Party faces three choices: to have a promise of much larger tax cuts, it either has to cut services, borrow more, or flip-flop yet again. If one can change one’s mind on every promise one has made in the last 2 or 3 years, then why would one not change one’s mind on the promises one makes before an election, once the change happens? Remember what the member’s motto is, as revealed in the New Zealand Herald“whatever it takes”—whatever it takes.