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Labour Party: Plan For Responding To The Economic Downturn

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The New Zealand economy is clearly facing short term challenges from the global financial turbulence. Labour will ensure that the current international crisis does not lead to a prolonged recession in New Zealand.

We have already announced a retail deposit guarantee scheme to reinforce confidence in our financial and banking systems. The scheme covers all retail deposits of participating New Zealand-registered banks and retail deposits by locals in non-bank deposit-taking entities, such as building societies, credit unions and deposit-taking finance companies

The deposit guarantee is designed to give assurance to New Zealand depositors that their deposits are safe in the current uncertain international financial market conditions.

Labour has begun work on an economic stimulus package which will be implemented if the projected impacts on the New Zealand economy remain as they appear to be at the moment.

Labour will before Christmas 2008, present to Parliament an additional economic stimulus package which will outline a plan to bring forward infrastructure spending, with particular attention to:

* Rail and roading improvements
* Local government sewerage and water projects
* Afforestation for conservation purposes
* Retrofitting and upgrading the State Housing stock
* The school and early childhood centre building programme
* Further details of this programme can be found in the appendix.

In addition to bringing forward planned spending, we will also be making temporary changes to the provisional tax regime.

Labour will, for the period from 15 January 2009 to May 2010, reduce the use of money interest rate for underpayments of provisional tax to the same level as that paid for the overpayment of provisional tax.

But the Commissioner of Inland Revenue will have the discretion to increase the use of money interest rate back to the normal level if he is satisfied that there has been a deliberate attempt to underpay tax.

Note: current use-of-money interest rates are 14.24% for underpayments and 6.66% on overpayments.

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