PSA MEDIA RELEASE
May 16, 2011
For Immediate Use

Sub-zero budget highlights tax cuts folly and Government’s lack of vision on growth

Thursday’s budget is being dubbed the “zero budget” but it’s actually a “sub-zero budget” says the PSA and one that will highlight the recklessness of last year’s tax cuts and the Government’s lack of vision for the economy and lack of commitment to public services.

“Flat growth, continuing high unemployment and unaffordable tax cuts all point to a government that has no plan,” says the public sector union’s National Secretary Brenda Pilott.

“The Finance Minister Bill English has already admitted he has no master plan for the state sector but the Government also appears not to have a master plan for the economy. Tax cuts for the well off and budget cuts that impact services for New Zealanders won’t stimulate economic growth.

“Nearly 150 years of international evidence shows an inextricable link between investing in public services and the growth of national economies.

“Look at Sweden where government spending accounts for 55 percent of GDP. It’s being called Europe’s new “tiger economy” with growth around 6 percent last year and forecasts for this year raised to 4 percent.

“As for public services, the Budget’s $0.8 billion in so-called new spending for Health, Education and Justice will be funded by cuts elsewhere. On top of this a further $189,000 in employer contributions for saving schemes is tipped to be billed to individual departmental budgets.

“The Government needs to invest in public services to stimulate growth not starve them.

“CTU economist Bill Rosenberg’s analysis estimates that the Health sector needs $564 million just to stand still so whatever cut of the $800 million being made available the Health sector actually gets it won’t be nearly enough to improve or prevent health service losses.

“The Government’s reckless tax cuts, which amount to some $14 billion over the next four years and benefit the country’s high income earners most, cannot be ignored when we view Thursday’s budget. It’s appalling that vital public services like health are being undermined because of these tax cuts.

“The Government has also refused to consider a temporary levy to pay towards the rebuilding of Christchurch, instead preferring to cut spending on vital public services and increase its debt,” says Brenda Pilott.

ENDS

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