National’s Train Wreck of Debt Gathers Momentum

National’s self-proclaimed ‘Building Momentum’ Budget is looking more like an out of control debt train wreck with the country’s overseas net debt topping $200 billion by 2017 and the current account deficit topping $17 billion a year, the Green Party said today.

Both the Reserve Bank Governor and the IMF have signalled early warning signs of an economy that has not rebalanced successfully towards savings, investment, and export-led growth. Budget 2013 confirms that direction.

“Budget 2013 does nothing to address the fundamental imbalances emerging in our economy meaning this recovery will be neither jobs-rich nor sustainable,” said Green Party Co-leader Dr Russel Norman.

“The National Government has failed to rebalance our economy as promised.

“Bill English made rebalancing the economy his primary goal in earlier budgets. In Budget 2013, he failed to mention it once.

“The current account deficit is the key economic measure of the success or failure of the broader economy. Treasury now forecasts the deficit to rise to 6.5 percent in 2017 making our deficit the second worst in the developed world. 

“This is a debt time bomb that a return to Government surplus alone will not address.”

Dr Norman highlighted emerging imbalances in the housing sector as the most dangerous for the economy.

“National’s new housing policy is too little too late, and will serve the interests of property developers more than it will help first home buyers and those looking for a house to call home in Auckland,” Dr Norman said.

“It comes long after the Greens have announced practical solutions, like Home for Life and a tax on capital gains (excluding the family home), to address an anticipated housing shortage and housing affordability crisis.

“National’s on-going failure to institute a capital gains tax means they’re still to close the single largest remaining loophole in our income tax system.

“Selling assets, massively increasing debt, a new housing bubble, and the earthquake rebuild might keep the train on the track until the election, but it will lead to major problems further down the track. It is an out of control train wreck of debt that future New Zealanders will one day have to pick up the bill for.”

ENDS

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