20 Aug 2014

Key dismisses Labour, Greens plans

7:23 pm on 20 August 2014

Labour and the Greens will send the country back into significant deficit if elected, Prime Minister John Key says.

John Key talking to the Otago Chamber of Commerce at Forsyth Barr stadium in Dunedin.

Prime Minister John Key Photo: RNZ / Ian Telfer

Political parties are reassessing their spending promises after the an updated economic forecast, released yesterday, showed growth would be slower than predicted during the next few years.

Treasury's updated forecast, released yesterday in its Pre-election Fiscal Update, has growth peaking at 3.8 percent in the March 2015 year, compared with 4 percent predicted in May's Budget, before easing back further in the next three years.

The reduced growth will affect the Government's financial position and there will be smaller surpluses because of a lower tax take.

Both Labour and the Greens said they would still be able to deliver surpluses and pay off debt under their plan.

But Mr Key said he did not believe them.

"These are people that will send New Zealand back into a significant deficit, and I think New Zealanders will be very worried about that," he said.

"We're at a time where the books were opened yesterday, they showed that a surplus is attainable but it will take good economic management.

"One thing we know about Labour and the Greens is they're not known for good economic management."

No big spend-up

Finance Minister Bill English.

Finance Minister Bill English. Photo: RNZ

Finance Minister Bill English said the reduced tax take meant a re-elected National-led government would not be able to deliver a big spend-up, as it would want to keep paying down debt and investing in public services.

But Mr English said tax cuts - hinted at by the Prime Minister at the time of the Budget - are still on the cards.

"We've allowed a billion and a half; roughly about a billion of new spending and roughly about half a billion for, potentially, tax reductions. And the surpluses over and above that go to the repayment of debt, so we think we've got the balance there about right."

Labour Party leader David Cunliffe (right) and finance spokesperson David Parker outlining the KiwiSaver policy.

David Parker (left) and Labour Party leader David Cunliffe. Photo: RNZ / Diego Opatowski

Labour Party finance spokesperson David Parker said if Labour gets to form a government it has about $200 million a year budgeted for items that third parties would want.

"We've also made it clear that if third party aspirations can't be met from what we've allowed, and we have to give on them, then we also have to give on some of own policy, because we're committed to running surpluses."

Mr Parker would not say which policies Labour would modify.

Greens release fiscal plan

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Russel Norman Photo: RNZ / Chris Bramwell

The Green Party said it would produce bigger surpluses and repay debt sooner than either National or Labour.

Co-leader Russel Norman released the party's full fiscal plan this morning, along with an independent review by economic consultancy Infometrics.

Dr Norman said the review proved the Green Party would run annual surpluses $2.2 billion larger than National by 2017/18.

"That's what progressive governments do, they make sure that the government has strong books so that it can deal with crises, (with) difficulties when they happen, that's what progressive government is all about."

Dr Norman says the Green Party would live within its means, while also reducing child poverty, cleaning up the environment, and improving the economy.

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