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Growth In Social Spending Will Slow Tax Cuts - Cullen

Fuseworks Media
Fuseworks Media

Finance Minister Michael Cullen today said that tax cuts would mean a reduction in the growth of spending on social services.

He was being grilled in Parliament by National finance
spokesman Bill English, who said Labour was planning to increase
borrowing, after a comment Dr Cullen made on Tuesday that debt would
remain about 20 percent of GDP. National said that would be an increase
as it was currently 18 percent.

"Does he recall saying in respect to tax cuts `when you cut
your income you either borrow more or spend less' and also that any
increase of borrowing is `fiscal lunacy'. So what is his opinion now
that he is planning to increase debt at the same time as cut taxes?" Mr
English asked today.

Dr Cullen responded: "Of course the growth in spending in the
future and the rate of increase in social services will have to be
slower given tax cuts."

Mr English said Dr Cullen's line was now what National had been saying.

"Can the minister now confirm that when National says it's going
to slow the growth in social spending it's called a spending cut, but
when he has just said he's going to slow the growth in social spending,
that's what you need to do to pay for a tax cut you never wanted."

Dr Cullen said when National was in Government it froze pensions, cut benefits and imposed hospital charges.

"We know what cuts in social spending look like they look what a National government does when it gets its hands on power."

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