English grasp of economics baffling
Monday 16 April 2007, 6:49PM
356 views
National finance spokesman Bill English's one track fixation with government spending underlines how keen he is to slash essential public services, Finance Minister Michael Cullen said today.
"Mr English blames government spending for the high dollar. However, there are many domestic and international factors at play which he conveniently ignores," said Dr Cullen.
"High international dairy prices, strong domestic housing demand, easy bank credit and US housing market weakness are all factors.
"The Australian dollar is at a 17 year high against the US dollar. It's hard to work out how New Zealand government spending is causing that.
"If the problem is government spending, then Mr English must explain how many hospitals and schools will have to close? How many police, teachers, nurses and doctors will lose their job? And which roads does he want to stop building?
"In fact, for many years this government has been running strong cash surpluses, supporting monetary policy by taking demand out of the economy.
"The irony is that National planned to run a loose fiscal policy should it have won the last election. The planned multi-billion dollar tax cuts favoured by John Key would have been irresponsible and put the dollar under even more pressure, unless they were matched by big spending cuts.
"Either that or National would have had to scrap the tax cuts and admit they were a foolish election bribe. Exporters should be grateful it didn't get that chance."
"The real issue here is the continuing tension between Mr English who wants to cut government spending and Mr Key who still favours big tax cuts and spending increases to placate half his caucus."
"Mr English blames government spending for the high dollar. However, there are many domestic and international factors at play which he conveniently ignores," said Dr Cullen.
"High international dairy prices, strong domestic housing demand, easy bank credit and US housing market weakness are all factors.
"The Australian dollar is at a 17 year high against the US dollar. It's hard to work out how New Zealand government spending is causing that.
"If the problem is government spending, then Mr English must explain how many hospitals and schools will have to close? How many police, teachers, nurses and doctors will lose their job? And which roads does he want to stop building?
"In fact, for many years this government has been running strong cash surpluses, supporting monetary policy by taking demand out of the economy.
"The irony is that National planned to run a loose fiscal policy should it have won the last election. The planned multi-billion dollar tax cuts favoured by John Key would have been irresponsible and put the dollar under even more pressure, unless they were matched by big spending cuts.
"Either that or National would have had to scrap the tax cuts and admit they were a foolish election bribe. Exporters should be grateful it didn't get that chance."
"The real issue here is the continuing tension between Mr English who wants to cut government spending and Mr Key who still favours big tax cuts and spending increases to placate half his caucus."