23 July 2002

National Has Done Its Figures - Carter

"National has a proud and strong fiscal record, which we will carry on during our next term of government," says National's Finance spokesman David Carter.

"We have allocated $800 million of new spending for each year during our first term of government and this will rise to $900 million per annum in our second term."

Mr Carter says National will keep its spending commitments within this limit.

"Assertions made by Dr Cullen that National won't be able to meet rising cost pressures within this allocation are just wrong. He should be more concerned about meeting Labour commitments under his proposed economic policy of tolerating more inflation.

"Under Labour's higher inflation policy, public sector costs will be rising significantly faster than they will under National. This means an extra 1% inflation will see health and education needing another $150m per annum just to stand still."

Mr Carter says National's spending commitments will see spending total $42.775b (32.6% of GDP) in fiscal year 2003/04, $44.071b (32.1%) in fiscal year 2004/05 and $45.664 (31.9%) in 2005/06.

"Tax revenue is forecast to rise, even after factoring in our tax reductions. However, tax revenue is expected to fall as a percentage of GDP. Tax revenue is forecast at $40.829b (31.1% of GDP) in fiscal year 2003/04, $42.397 (30.9%) in fiscal year 2004/05 and $43.705 (30.6%) in 2005/06.

"This gives an operating balance forecast of $1.772b (1.4% of GDP) in 2003/04, $2.301b (1.7%) in 2004/05, and $2.251b (1.6%) in 2005/06. These operating balance forecasts are lower than Labour's, but National believes it is important to return funds to the businesses and families that have earned it."

"Factoring in our longer term spending, along with our tax reduction out to 2007, will see the operating balance stable at around 1.5% of GDP, before rising back to around 2.9% of GDP by 2012. This makes no attempt to factor in any dynamic effects of higher growth."

Mr Carter says National's projections are based on Treasury's current medium term growth forecasts of 2% per annum and are based on the latest version of the long-term fiscal model made available after the budget.

"National is also committed to a comprehensive review of the government's investment programme. Wherever possible, we will look to make use of public private partnerships to meet the investment needs of the government.

"This will reduce the amount of cash required by the Crown," Mr Carter says.

Ends

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