Nats’ sums still don’t add up

Do you believe in fiscal miracles? Yes? Then get along to National’s conference.

There you’ll hear that, having incorporated this year’s tax cuts, National will fast-track a second round of tax cuts in April next year, a year earlier than those announced by Labour. And have another round in April 2010. Why? Because we deserve them and we’ve been waiting “far too long already.”

And.. wait for it… National will not borrow to fund this.

In fact, National will be more relaxed about running deficits in an attempt to boost the economy. This means that we can get our tax cuts and keep our core services!

Sounds like Keynesianism on steroids. I guess the Nats are depending on people not understanding the meaning of “structural deficit”.

You can sort of understand their reluctance to act responsibly, having watched the news media hound Cullen over recent years for his principled refusal to countenance a structural deficit, before finally caving into political reality and wearing the consequences.

Something’s got to give fiscally. Otherwise, the economic impacts will be painful. A rising exchange rate, striken export sector and stagnating economy. Followed ineluctably by gruelling readjustment as we regain our fiscal balance.

National must give us the sums that show how they can accomplish this fiscal miracle of cutting taxes whilst maintaining spending and not borrowing, during the downswing of the economic cycle. It doesn’t add up.

[Update: The Standard condemns the fiscal conjuring as spin.]

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11 Responses to “Nats’ sums still don’t add up”

  1. Inventory2 Says:

    JP – surely National can’t do the sums until Cullen opens the books and shows how bare the larder is, so stop your whingeing! You lefties have been asking for policy, and when they release some, all you do is complain! Grrrrr!

  2. macdoctor01 Says:

    JP: All this demonstrates is one of the fundamental differences between Labour and National. Socialists tend to use taxes to fund asset construction (like roadways) or purchase (like railways). Hence they need LOTS of tax take. Conservatives are perfectly happy to borrow for assets and thus reduce their need for excessive taxes.

    To give a simple example. Key has said that National will look at upgrading the road between Wellington and Auckland to dual carriageway/motorway. The productivity gains for the country are obvious. Unless you really think our narrow gauge railway will be able to replace decent roads.

    [pause here for hysterical laughter track]

    Labour would take fifty years to do this out of standard tax take. National will borrow the 10 billion or so it needs, build the thing within ten years and then toll it just enough so that the cost of paying back the 10 billion does not involve increasing taxes.

    The people that need the roads now will be happy to pay the toll as they will now be making the extra money that they need to pay for it and then some more. And the enlarged tax take from the increased productivity can be used either to reduce the toll or lower taxes still further.

    This is how you reduce taxes without reducing essential spending. I imagine there is also plenty of scope for whittling down the current government gravy train without making a fig’s worth of difference to the man in the street.

    And as I2 says, If you want actual figures, you are going to have to wait until the current incumbents go bye bye…

  3. Inventory2 Says:

    Did Steve Maharey ever find the ditch he was going to die in if Labour ever got into Public-Private Partnerships?

    I2, Ouch!

  4. Anita Says:

    Inventory2,

    You lefties have been asking for policy, and when they release some, all you do is complain!

    This isn’t policy.

  5. Inventory2 Says:

    No, they’ve said that they will release the detail in the first week of the campaign. You’re not going to suggest that Labour isn’t keeping something up it’s sleeve are you?

    Anyway, JP knew where I was coming from 😉

  6. Anita Says:

    Inventory2,

    Out of interest, can you tell me when the clock for the “first week of the campaign” will start ticking?

  7. Inventory2 Says:

    Sorry Anita, but at the moment, only Helen Clark can answer that question! But if she loses NZ First’s confidence before the Appropriations Bill is passed, it could be sooner than later.

  8. Anita Says:

    Inventory2,

    Does Key mean the week after Clarks’ announcement? Or the week after writ day? Or the week after the opening addresses?

  9. Inventory2 Says:

    I would guess he means in the week after the respective leaders open the campaign. That’s the traditional “definition”.

  10. Inventory2 Says:

    Must go – there’s something of more immediate importance now! Go Black!!

  11. Felix Says:

    “I would guess he means” is a phrase you apologists will seriously regret using if we are foolish enough to elect that nice Mr Key.

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