19 August 2014

Soaring debt shows National poor economic managers

Treasury’s pre-election update today shows net government debt will be substantially higher than forecast just three months ago, the Green Party said today.

“National like to paint themselves as a safe pair of hands on economic management, but Treasury figures show that net debt is projected to be $3 billion higher in 2018 than projected in the May budget,” Green Party Co-leader Russel Norman said.

“That equates at $663 per New Zealander in the last three months alone.

“In six years of National management, net debt per person has risen to $14,368 from $2,994.

Treasury’s Pre-election Fiscal and Economic Update (Prefu) showed that net debt will rise to $67.9 billion in 2018, almost exactly $3 billion more than forecast in the May budget.

“The Prefu showed the Budget surplus for 2014/15 is even more wafer thin than projected in May, while the surpluses for the next three years are substantially lower,” Dr Norman said.

“The lower surpluses result from lower forecast economic growth essentially due to lower dairy prices.

“This exposes National as managers that have no clothes. Only a poor manager would make the economy more reliant on commodities such as milk powder and logs, as National has done, and now our fortunes swing to the vagaries of international commodity prices.

“Treasury identified the main factors supporting economic growth as house building in Christchurch and Auckland and faster population growth based on high immigration. This is an dependent economy, not a rock-star economy.

“One thing that hasn’t changed since May is that National is stripping funding, in real terms, from the health, education and environment sectors to the tune of at least $3.8 billion over the next three years.”

Independent analysis of the Government’s books, by economic consultancy BERL, commissioned by the Green Party, reveal National is planning multi-billion dollar cuts to health, education, and environment spending over the next three years in real terms.

“National is being tricky with the books. This is a deliberate deception so National can claim a budget surplus when the reality is that hospitals will be under even greater pressure to cut services while every child in education will be worse off,” said Dr Norman.

“At the time of the Budget in May, National brushed off criticism of these cuts saying they weren’t true. That was spin. National’s cuts to health, education and environment spending are real.

“We will produce stronger surpluses, pay down debt faster, plug spending holes in the current Government’s budget that will lead to a more prosperous New Zealand.”

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