Council of Trade Unions media release
8 November 2010

Government finances not an excuse for further cuts

The government financial statements released today provide further evidence that the economy is stagnating, said CTU Economist and Policy Director Bill Rosenberg.

“The Government should not use this financial result as a reason to cut back further on expenditure. Instead it needs to ensure that activity levels in the economy are maintained and boosted,” said Rosenberg.

Aside from the one-off hits due to the South Canterbury Finance bailout and provision for the Canterbury earthquake, revenues from GST and company tax are down $1.1 billion, showing that people are concerned about the future and activity in the economy is still fragile.

Another indicator came last Thursday, when it was revealed that the unemployment rate for women was at its highest level since the recession began, at 7.2 percent.

The Operating Balance Before Gains and Losses was $2.2 billion worse than expected and after gains and losses was $1.5 billion worse, helped by gains on investments.

“We all understand the Government is keen on rebalancing, said Rosenberg. “But it needs to take into account the slow recovery and the effect it is having on people’s welfare. By ensuring that the benefit of the tax cuts went to people on high incomes, the results for the economy have been muted. There is a need for a new approach to the economy that increases productivity while ensuring that the benefits are spread to those on low incomes.”

ENDS

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