Hon Bill English
Minister of Finance

29 May, 2009
Media Statement

Borrowing costs would rise under Labour

The National-led Government is managing the economy far better than Labour would have and this is proven by Phil Goff’s desire to borrow more and send the country deeper into debt, Finance Minister Bill English says.

Labour leader Phil Goff has said his party would have ignored the threat of a credit rating downgrade if it was still in government, meaning the borrowing costs of every New Zealander would have risen.

“Phil Goff would have borrowed billions to fund Labour’s next two rounds of tax cuts on April 1, 2010 and April 1, 2011 and to invest in overseas sharemarkets,” Mr English says.

“He would have been happy to saddle New Zealand with higher interest rates so his party could have gone on a massive debt-fuelled spend-up if it was still in government.

“Labour has an appetite for borrowing and it seems to be insatiable. Labour simply has not adjusted to the reality that times have changed – there are not billions of dollars of surpluses splashing around to be spent anymore,” Mr English says.

Treasury has estimated a rating downgrade would have pushed up the cost of borrowing for every family with a mortgage and every business by about 1.5 per cent.

A family with a $300,000 mortgage would be almost $100 a week worse off, or one with a $150,000 mortgage would have been almost $50 worse off a week.

“Going on a borrowing binge would have also undermined business and consumer confidence and that costs people their jobs. By contrast this Government’s Budget contains initiatives that will support and create thousands of jobs.

“The National-led Government has delivered a Budget which maintains all entitlements and puts New Zealand on the road to recovery,” Mr English says.

ENDS

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