Key willing to gamble with NZ’s future to get elected

The National Opposition risks doing serious damage to the reputation of New Zealand as an investment destination and place to do business with its back-to-the-future proposals to bury the Crown in more foreign debt just to pay for tax cuts, Finance Minister Michael Cullen said today.

“National’s infrastructure announcement is gimmicky and insubstantial,” Dr Cullen said. “The reality is all they have done is re-announced a plan to subsidise Telecom’s rollout of fibre to the home – a widely panned proposal that has nothing to do with economic growth – and promised to spend more on roads without naming any actual new roading projects.

“Today’s announcements are a simple diversion from the real news out of the National Party Conference – John Key would borrow to pay for tax cuts.

“It is a tragedy of New Zealand history that previous National administrations got our country into a mess in the past through massive overseas borrowings. The hurt caused to families and to small businesses, when those damaging policies eventually had to be corrected, was immense in our not-so-distant past.

“In 2008, after nine years in Opposition to devise its vision for New Zealand, it is a black farce that when the National Party finally gets round to outlining its economic programme it amounts to nothing more than four words – More Borrowing From Foreigners.

“With international financial markets under pressure, expressed in rising borrowing costs for anyone with a small business or home mortgage, this is completely the wrong time for any party that has aspirations to lead New Zealand to propose that the Crown join the credit card band-wagon.

“The truth is Labour has overseen one of the most aggressive infrastructure investment programmes in New Zealand history, and we will keep that going in our next term without whipping out the public’s credit card to do so.

“John Key does not genuinely believe his own spin that he is borrowing for infrastructure. His flip flops and bribes have left him with a massive hole in his alternative budget – now he wants to borrow from our kids to cover it.”

Labour-led government’s infrastructure investment programme

The Labour-led government has invested heavily in infrastructure and will continue to do so. Our infrastructure programme has been delivered at the same time that we have reduced Crown Debt from over 35 per cent to around 20 per cent of GDP. The government’s ambitious infrastructure programme over the next few years will be delivered without abandoning the prudent gross debt target of around 20 per cent of GDP.

Labour’s investment in transport infrastructure

The Labour-led government is currently funding the largest-ever investment in New Zealand’s road network. Over our nine Budgets, annual funding for roading has more than doubled from $850 million in 1999/2000 to over $1.9 billion this year. Our annual investment in public transport this year is over fifteen times greater than that of 1999/2000.

On 1 July, the government invested $690 billion in buying back New Zealand’s rail asset and has signalled a capital investment in trains and tracks of well over $500 million.

Energy infrastructure

According to figures released by the Electricity Commission, there are now more than 1300 megawatts of new generation projects on the drawing board over the next four years, equating to roughly $3.5 - $4 billion of capital investment. This is about 15% of New Zealand’s entire generation capacity today. This is the largest expansion of energy infrastructure since ‘Think Big’ and is far more than needed to meet increased demand for electricity.

Public service infrastructure

The Labour-led government has invested in a huge revitalisation programme for New Zealand’s front line public service infrastructure. This includes the largest hospital building programme in New Zealand’s history, with new and refurbished hospitals from Kaitaia to Invercargill. More than $1.5 billion has been invested in major capital projects in the public health system since 1999. Major projects approved in the nine years prior to 1999 amounted to less than one-third of the investment we have since made in this area. Seven new hospitals have been built since 2000. Eight hospital campuses have had major refurbishments or been significantly redeveloped since 2000. In addition, ten specialist facilities have been built; three more redevelopment projects are almost complete; and a further four major capital projects for hospital redevelopments have been approved and are underway. Also, new courts have been constructed throughout New Zealand and the government has continued to proactively build new schools in high growth regions and hundreds of millions have been invested in new, modern classrooms.

Crown’s Cash Position The Treasury in May forecast cash deficits of around $3.5 billion a year over the next few years. The Treasury will update its forecasts in its Pre-Election Economic and Fiscal Update report, but tax receipt data from Inland Revenue suggests that the forecast Crown’s cash position will be weaker than that in the next few years due to the weakening global economy feeding through into Crown tax revenue.

Labour’s investment in transport infrastructure The Labour-led government is currently funding the largest-ever investment in New Zealand’s road network and has increased public transport funding by almost 1100 per cent (from the $41 million spent in 1999/00, the last year of National’s government).

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