Tuesday, September 06, 2005

Political finance -

Services safe from tax cuts, says Key


National finance spokesman John Key has defended the party's tax cuts policy, claiming it would not axe funding for vital services but simply increase spending at a slower rate than Labour.

Interpretation –

We will allow the inflationary effects of the tax cut to reduce the value of spending on “vital services”.

From Cullen -
This $7.2 billion in lost revenue from tax cuts would have to be funded through borrowing and cuts to services.



National has said it would borrow $3.5 billion over four years to fund the costs, leaving, by Dr Cullen's estimate, $3.7 billion in cuts to spending.

National had said it would cut the savings incentive scheme Kiwisaver and some other items to save $950 million over four years. This would leave $2.7 billion in cuts which National had yet to identify, Dr Cullen said.


Interpretation –
Simple arithmetic.

Mr Key told National Radio today that Labour was proposing to increase government spending "much faster" than the rate of growth in the economy.

Interpretation –
Yeah, well that makes sense since Labour’s version of the tax cuts is essentially “government spending”. So, a point of difference, and Jonkey is right.

Dr Cullen was saying this rate of spending was what everyone should accept as normal and that National's slower rate of spending amounted to a cut in spending, Mr Key said.

"Well, that's nonsense," Mr Key said.

National would increase government spending as a percentage of GDP and would spend around $10 billion more by the third year, Mr Key said.

Interpretation –
We think that Labour is spending too much as a percentage of GDP. However, we want to tell you that we are not going to cut services, so I have to tell you that National will increase spending too.

What is more, we are going to give you $7.4 billion, and then spend even more.

Jonkey logic for ya.

National would be spending more but at a slower rate than Labour.

Interpretation –
1. We will borrow it so that the revenue impact is visited upon your children and your children’s children.
2. We will spend it, but we dont want to rush things unless another of our promises (like the tax cuts) comes totally unstuck (as it might) and we end up broke in two years instead of three...

From the surplus, National had enough to pay for all of the day-to-day expenditure it was committed to, "every nurse, every teacher, every doctor", enough to pay for all of the pre-funding of New Zealand Superannuation, and enough to have some left over to fund some capital requirements, Mr Key said.

Interpretation –
At the end of three years there will be nothing left in the bank.

Neither Labour or National had enough cash to pay for all capital items but that was not unusual, Mr Key said.

That was the way every OECD country operated and that was the way New Zealand had operated up until the past two years when it had very large surpluses, he said.

There was "very limited room" to make new expensive pledges, Mr Key said.

Interpretation –
That doesn’t stop us though, as we hope you haven’t noticed.

"Our main pledge has been to reduce taxes. That's been our big key policy plank if you like in terms of spending so we have move around with that."


Interpretation –
We’ll play “peas’n’cups” for as long as you like. You can ask anyeverywhichaway you like and we will have an explanation. We have succeeded in making the numbers so big that we don’t understand them. You voters have got no show!

Dr Cullen said: "There are no thousand dollar notes sitting around in this office for Mr Key to come in and give away as tax cuts."


Interpretation –
I got them all in my wallet.

National's promises were the "most profligate approach to try and buy an election since Sir Robert Muldoon".


Interpretation –
We had y’all sold from the start.

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