Key and fiscal reality drift further apart.

Finance Minister Michael Cullen says the National Party’s arguments about the affordability of large tax cuts are becoming increasingly absurd.

“John Key is now arguing that large tax cuts year after year can be paid for out of the $2.4 billion cash surplus in the financial year ending 30 June. But even that would not pay for one year’s tax cuts of the size National has led people to expect.

“Mr Key needs to remember National has now promised substantial tax cuts for all workers, a move in all the thresholds, a cut in the top rate to 36 cents, a company tax rate of 30 cents, tax breaks for the racing industry, the shift of all petrol excise duty to the Land Transport Fund, and the abolition of the carbon charge.

“This very large Tui billboard cannot be paid for out of $2.4 billion.

“In any case, the money is not there next year or the year after or the year after that. It will have been used to pay off debt and be gone by the election.

“Over the next four years the government is budgetting for an average cash deficit of $1.4 billion a year. So Mr Key faces two nasty choices.

“Either he has to explain what planned expenditure will be cut, by a total of billions of dollars a year, to pay for the promises. Or he has to explain how such a huge increase in borrowing will not lead to a rising mountain of debt and higher interest rates.

“For a novice politician, that will be a big ask indeed, “ Dr Cullen said.

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