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Opposition parties blame Govt for deficit

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Fuseworks Media
Fuseworks Media
David Parker
David Parker

Wellington, Dec 14 NZPA - Labour accused the Government mismanaging the economy and the ACT Party said it was gutless as political parties reacted today to the announcement that the budget deficit was forecast to reach $15.6 billion in June next year.

"The chickens are well and truly coming home to roost for National and they now need to accept it is the decisions they have made that have caused the accounts to deteriorate," said Labour's associate finance spokesman David Parker.

"They've blamed the former Labour government, they've blamed the Canterbury earthquake, despite record commodity prices they've blamed the slower than expected recovery, they've blamed a decline in the tax take, which they say is unexpected -- but they haven't blamed themselves."

Mr Parker said that having run up such a large deficit, National should admit it intended further cuts to education, health and other social services.

ACT's finance spokesman, Sir Roger Douglas, said the deficit didn't surprise him.

"The National Government is gutless and every New Zealander will have to pay the price for this extravagant spending," he said.

"What have we received in return? Our education and health systems are failing, our economy is in disarray and we are up to our eyeballs in debt."

Sir Roger said it was time Prime Minister John Key and Finance Minister Bill English admitted they were on the wrong course.

Green Party co-leader Russel Norman also said the Government had to take responsibility for its fiscal position.

"We are, literally, now borrowing money to pay for tax cuts for the well-off and motorway projects with negative economic returns," he said.

"Tax cuts directed towards upper income earners are one of the poorest ways to stimulate a failing economy."

Dr Norman said the Government was running an "old economy" which relied on cheap oil and paid subsidies to polluters.

BusinessNZ said the figures increased the urgency for actions that would create a more dynamic economy.

"BusinessNZ and other organisations have stressed the importance of taking action to constrain costs and get more dynamism in the economy, including increasing the entitlement age for superannuation, reducing the cost of KiwiSaver and making changes to interest-free student loans," said chief executive Phil O'Reilly.

The Council of Trade Unions (CTU) said next year's budget would be even tighter on new spending than this year, risking further stagnation and high unemployment.

"Rather than locking ourselves into tighter spending caps, there continues to be a strong need for the Government to stimulate the economy and help those who lose their jobs," said CTU economist Bill Rosenberg.

"If the Government is so worried about the deficit it should reverse its tax cuts for those on higher incomes."

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