Election 2014

3 Nov 2011

Labour says it will borrow more, but repay debt faster

7:30 pm on 3 November 2011

Labour leader Phil Goff says his party would borrow more than National in the short term, but would ultimately be in a position to pay off debt faster.

Mr Goff revealed on Thursday that Labour would borrow an extra $2.6 billion over the next three years if elected to power on 26 November.

The Labour leader came under sustained attack from National's John Key over the cost of its policy promises during the only public debate between the leaders in Christchurch on Wednesday night.

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The National Party will proceed with the partial privatisation of state-owned energy companies Genesis Energy, Meridian Energy, Mighty River Power and Solid Energy and reduce the Crown's shareholding in Air New Zealand if re-elected.

Phil Goff says because Labour will keep state assets in public ownership, it will not get the immediate gains from their sale that the National Party would, but New Zealanders would get to keep them.

National has accused Labour of having a $17 billion hole in its budget for the next four years. Mr Goff says National is expected to borrow $13 billion over the next three years, while Labour will borrow $15.6 billion.

However, he says Labour will retain state assets and the dividends they return to the Government and thanks to its proposed capital gains tax, it will then be able to pay down debt faster than National.

"Of course if you aren't going to sell your assets, there will be more short-term borrowing, but we'll keep our assets. And because of the capital gains tax, we'll be more aggressively paying back the debt further down the track.

"Under Labour's plan, we'll be paying off our debt just as quickly as National and we'll be back in surplus at the same time. The difference is, we'll still own our assets, we'll still be getting a return on those assets."

National's finance spokesperson Bill English doubts Labour's figure of $15.6 billion, saying he believes the party would need to borrow about $17 billion.

"I'm frankly surprised that we've got to three weeks out from the election and a party that thinks it's going to be government in a world which is obsessed with debt still can't produce what figures it's got for how much it's going to borrow."

Responsible fiscal plan, says Cunliffe

The Labour Party will release its full costings on Friday.

Phil Goff admits he was at a disadvantage during Wednesday's public debate with John Key because he could not provide those details. However, he says Labour will show Mr Key where it is finding the money - and the National leader needs to show where he will find new jobs.

Labour's finance spokesperson David Cunliffe is confident people will be satisfied the party has a responsible fiscal plan once they see the costings.

Mr Cunliffe told Radio New Zealand's Checkpoint programme on Thursday the reason Labour has not released the costings yet is because it was re-checking its economic package against the pre-election fiscal update released last week.

"We're comfortable that by the election, people will have a complete view of our policies and that they will know and be assured that they are both fiscally responsible and strategically going to solve our underlying problems."

Mr Cunliffe says under a Labour government, the country will return to surplus by the 2014 Budget.