Hon Dr Michael Cullen
Minister of Finance

24 August 2005 Media Statement

National understates spending cuts

“National has misled the public about the level of spending cuts needed to support its tax cuts,” Finance Minister Michael Cullen said today.

“National’s alternative budget, released last week, indicated that its tax rebates for students and childcare, the mileage allowance for elder care workers and the $25 million a year bribe to the racing industry would be funded from the new operating spending profile.

“But John Key said on Nine to Noon this morning that the promises, costed by National at $250 million in 2006-07, $235 million in 2007-08 and $245 million in 2008-09, would instead be funded by cost cuts in other areas.

“This is on top of the $300 million a year in 2006-07, $400 million in 2007-08 and $500 million in 2008-09 National is saying it would get by eliminating “low quality spending.”

“National should heed the experience of former Secretary of the Treasury, Graham Scott, who told an Act Party meeting a few weeks ago: At the risk of immodesty, the fact is that I know more about controlling government expenditure than the National front bench. They are talking as though it will be easy to cut enough fat from the state to pay for tax cuts – it won’t be.

“I have said throughout that National’s proposed spending cuts are unrealistic. Certainly there is no way they could achieve savings of the order they are talking about without cutting health, education and superannuation.

“The choice this election is clear: tax cuts which benefit top earners disproportionately at the expense of valuable public services or tax relief targeted to where it is needed most and which will not compromise the services on which New Zealanders rely,” Dr Cullen said.

ENDS

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