OECD points finger at Cullen as inflation culprit

Rodney Hide Wednesday, 25 May 2005 Press Releases - Taxation

ACT Leader Rodney Hide today hit out at Finance Minister Michael Cullen as the culprit in causing higher interest rates and inflation.

“The OECD report states in black and white that demand continues to be boosted by vigorous expansion in government spending. The OECD is correct to point the finger at the government sector.

“It is the rampant expansion of the government sector that is fuelling higher inflation and interest rates.

“The OECD’s reference to additional fiscal stimulus is a reference to the vigorous expansion of the government sector proposed by Labour.

He said Dr Cullen’s record speaks for itself: The highest inflation in over a decade, and the highest interest rates in the western world.

Mr Hide was scathing of last week’s budget showing no sign of let up in galloping government spending.

“Instead we have a projected acceleration in government spending. This is what is fuelling inflation and higher interest rates.

“Core government spending last year was $41.6 billion - that’s $196 per week for every man, women and child in the country.

“Cullen’s Budget Day forecast for 2009 is $57.2 billion (p.125 Economic and Fiscal Update). That’s a whooping 38 percent increase. That would take per capita spending to $261 per week.

“The Cullen forecast is for spending to increase 40 per cent faster than the economy is growing. No wonder hardworking Kiwis are groaning under the tax and spend polices of the Clark-Cullen Government.

Mr Hide said it was rich for Dr Cullen to refuse tax cuts because he was worried about the inflationary impacts.

“It’s Cullen’s spending that’s fuelled inflation and squashed growth.

“Clearly New Zealanders are more at risk from the Labour Government’s cavalier attitude to government spending than from people getting to keep a bit more of their pay through tax cuts.

“ACT would target the real inflationary evil - rampant government expansion - and not use inflation as an excuse to deny people tax cuts. ACT’s tax policy of a low 15% rate up to $38,000 and 25% after that is both affordable and fair.

“The OECD report is a damning indictment of the present government’s tax and spend policies, and will just add to their desire to call an early election, possibly as early as 30 July,” Mr Hide said.

ENDS

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