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National Blames Labour For Creating A Decade Of Deficits

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Fuseworks Media
Fuseworks Media

National Leader John Key says Finance Minister Michael Cullen must take responsibility for the state of the books, but Prime Minister Helen Clark says Labour is the right party to guide New Zealand through the economic storm.

Releasing the Pre-Election Fiscal and Economic Update (Prefu) ahead of the November 8 election, Treasury predicted much larger cash deficits than forecast, ending nine years of a golden run for Dr Cullen.

Mr Key said the cash deficits were an indictment on the Government's handling of the economy.

"After nine years of a Labour government we are now presented with a decade of deficits and quite frankly New Zealand can not afford Michael Cullen's high spending low growth programme."

He said Miss Clark and Dr Cullen had to take responsibility for squandering nine years of economic growth.

National would still be revealing its tax cuts package on Wednesday despite the books being worse than they feared.

Mr Key said the Government would have to make savings, but National would also look at ways to boost growth.

Dr Cullen should have cut taxes five years ago, but had instead gone on a spending spree.

Dr Cullen said the reduction of debt over the last nine years, boosts to savings and increased investment had shown he was prepared for the "rainy day" that was now hitting New Zealand.

Miss Clark said she believed New Zealanders would look to experience and common sense in handling the economic conditions.

"It is not a time to be slashing public spending, but it is certainly not a time to be borrowing for tax cuts," Miss Clark said.

"We have kept our heads."

The tax cuts in place now and investments made in the past and planned for the future were a "substantial plan" for the economy, she said.

Miss Clark, who is acting foreign minister, agreed with Dr Cullen that there would have to be a look at whether some spending could be reprioritised.

This included the large boost in foreign ministry spending.

Labour had already held back some intended policy announcements to see what the economic outlook was like.

Green co-leader Russel Norman said the Government should stop spending money on motorways and borrowing to invest in the New Zealand Superannuation Fund.

Sustainable policies such as Buy Kiwi Made and insulating homes would be a better way to help the economy, Dr Norman said.

United Future leader Peter Dunne said tax cuts were needed, but they should be targeted at families who were taking the brunt of economic hardship.

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