Key and English clash over basics again

The sharp divide over economic policy between John Key and Bill English has once again been underlined by the conflicting comments of the co-leaders.

The sharp divide over economic policy between John Key and Bill English has once again been underlined by the conflicting comments of the co-leaders, said Finance Minister Michael Cullen today.

"In almost every post-Budget interview done by Mr Key he has talked about tax cuts - the very thing that would push up interest rates and punish homeowners and exporters further.

"Mr Key has also opposed a regional fuel tax, indicating he would rather spend central government money entirely on regional transport projects.

"This spend-your-way-to-prosperity approach is a recipe for rising debt and higher interest rates.

"In contrast Mr English today was reading from a different script, advocating a tigher fiscal stance.

"Mr English has chosen the most hawkish of financial market commentaries on the Budget in quoting the BNZ's overview.

"I should note other comment on the Budget from the financial sector. ANZ bank said, 'once again, Dr Cullen has struck a good balance between running prudent fiscal policy and not fanning an excessive domestic economy.'

"First NZ Capital said the Reserve Bank 'is unlikely to be driven towards changing its policy stance as a result of the fiscal update.'

Credit rating agency Standard & Poor's said the budget places 'New Zealand's fiscal position among the ranks of AAA rated sovereigns such as Sweden, Norway and Australia.'

It noted that 'the operating balance remains in surplus, indicating that the New Zealand government is likely to continue to maintain fiscal discipline. It is very important that New Zealand walks a steady path of fiscal restraint in the face of a range of domestic imbalances.'

"Mr English seems to understand this, Mr Key clearly does not. Mr English wants to go much further. However, his spending cuts message isn't one National wants New Zealanders to hear which is why Mr Key and not Mr English did the big television and broadcast media interviews following the Budget."

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