It seems we're drifting back to those bad old days. Earlier this month, Prime Minister John Key signalled to an audience of his friends at a Business New Zealand meeting the promised tax cuts would be delayed to some unspecified time in the future. He said New Zealand could not afford "a runaway balance sheet".
Yet back on September 30 last year, Mr English was mocking then Finance Minister Michael Cullen for being over-cautious on the issue. He said: "Dr Cullen cannot be trusted to deliver on any future tax promises."
He compared that with National which "will have an ongoing programme of personal tax cuts. It will be a responsible programme and a transparent programme".
He said he would treat Labour's tax cuts, which came into force the next day, "as the first tranche on our tax-cut programme. That will be followed by another tranche of tax reductions on April 1, 2009, and further tranches in 2010 and 2011". He declared: "National has structured its credible economic package to take account of the changing international climate. Our tax cut programme will not require any additional borrowing."
A few days later, Mr Key launched "a tax package for our times" that is "appropriate for the current conditions". He said it would require "no additional borrowing, or cuts to frontline services to fund it. There is, in fact, a small saving to be made, of $282 million".
Somehow, cutting taxes dramatically was going to increase government income. On December 16, Mr English was up in the House confirming "National will not be going back on any of those promises, as we fully costed and funded them".
The Government is now making out some economic thunderbolt has suddenly hit New Zealand and thrown their pre-election calculations out the window.
But even economic ignoramuses like myself knew a global crisis was nigh. The experts had been saying so for long enough.
Rudman conveniently overlooks one rather important fact. The $3.1 billion surplus predicted by Mickey Cullen just twelve months ago is now a projected deficit of almost $8 billion - a huge, unparallelled turnaround. We now know that Cullen was less than transparent with Prefu, especially with regard to ACC, and we strongly suspect that he knew that the New Zealand economy was in far worse shape that he ever let on.
But Rudman has done the National Party speechwriters a favour. They now know the line that Labour will take in the Budget Debate which follows Bill English's speech tomorrow afternoon. There will be no alternatives suggested, because Labour has none - that has been abundantly clear for some time now. And of course, it's hard for Labour's economic wizard David Cunliffe to gain traction; he still has the stench of Baygate hanging over him, not to mention the perception of guilt by association over the Bill Liu citizenship rort.
Personally, we'd love to get another tax cut next April, but we accept that the government has limited options. We will however get stroppy if Bill English does anything more than postpone them though!
10 comments:
If there was a media award for the journalist who most promotes the left wing cause/view,Brian Rudman would win it hands down.Shit!..,three quarters of the
political reporters would be eligible.
sbk
Quite so sbk - Rudman would win the print award, although he'd be pushed by Rod Oram. And Duncan Garner would be a shoo-in for the TV prize.
I don't agree. The argument was one of true economic stimulation. The government cannot do that by insulating houses or any other method of redistributing any tax funds they may take. Impossible. So while Rudman may be all of what he is accused of being and lack the balls to speak the full truth, he is right in saying National have misled the people who supported them on this point. But that is only a small, almost irrelevent part of the story. Cullen had it wrong and English now has it wrong and what's worse is that he knows it's wrong and has sold NZ out AGAIN for some undisclosed purpose.
I agree with Rudman that in that if National reneges on the promised tax cuts then they are breaking a big pre-election promise. I will feel let down. National should stick to cutting taxes, they promised too so confidently and broadly.
I accept that argument to a point Anon. Had the economic situation been as predicted in the Prefu, it would be perfectly in order to lambast National for welching on tax cuts. But it wasn't - there was general shock and bewilderment at the deterioration of our financial situation - from both the outgoing and incoming governments.
On that basis, I'm prepared to cut English some slack, so will hope that tax cuts have merely been postponed.
Look at it this way, in an oversimplification.
If the nation needs cash in a recession, it won't get it through taxing people the same or more. Productivity needs to increase.
The people have had redistributed money from the last Labour government - it's spent. Reserves for luxuries gone. Now the people need whatever stimulus possible to make more money, through relaxing tax rates at least and certainly cutting public corp. fat.
Whether it is 11 billion or 22 billion the method remains the same. It's a basic concept and one that was sold by National to the voting public. Now instead they've opted for borrow and spend and tax and regulation just like every other socialist government. I would expect huge cuts to government spending in upcoming budget to justify any lack of tax cuts. But they won't be there. There is an obvious disconnect between the stated threat and the remedial action.
Any way you look at it, National have reneged on their promises and their own ideology. Their actions don't even fall into the ballpark of pragmatism. They are indeed "Labour Lite".
They could cut taxes by not building the cycle-way (not needed anyway), cutting back further on the public servants, borrowing more, sticking to their pre-election promises is vital, for me they've now lost much credibility, as Kiwis we never win, the mass exodus to Australia won't be stopped any time soon, and no wonder. Anon.
Anonymous, Australia isn't going to be much better - there's a left-wing federal government here that's just given the unions the biggest power-boost since Federation - unions are now aiming to remove all individual employment contracts and replace them with mandatory collective wankery. It's the worst possible thing that could happen to an economy (apart from the huge pork-stimulus spending that's coming - see Werribee Rail corridor for a good example).
My income has more than halved. This is because the provident are required to subsidise the improvident.(the Bollard effect)
The improvident will dig themselves a deeper hole, requiring more benefits from the taxman.
The taxman is already getting about 50% less revenue, this year, from me.
I might choose to make it 100% less next year.
Personally, we'd love to get another tax cut next April, but we accept that the government has limited options
Limited options? Crap. Here's some simple options:
* stop all benefit payments
* stop all payments for schools
* stop all payments for hospitals
* eliminate the unions
* require all prisoners to pay for the costs of their confinements.
OK, now that should get be some pretty damn big tax cuts!
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