At Finance and Expenditure Committee today the Minister of Finance admitted that the Government will have to borrow to make ends meet in the forthcoming Budget.
“This admission is in direct conflict with the statements made by Nicola Willis in opposition that the tax plan requires no additional borrowing. Yet today we discover that additional borrowing will be happening,” said CTU Economist Craig Renney.
“The Minister is still insisting that the additional borrowing will not pay for tax cuts, even though it’s clear that without these tax cuts, additional borrowing would not need to take place. The obvious lesson from all of this is that the government is borrowing to pay for tax cuts.
“The economics of this make no sense. Given the economic circumstances that New Zealand is in, if we are borrowing, it should be for investments that will lead to long-term productive growth. It should be for infrastructure, R&D, and public services. Instead, we are providing yet more money for landlords, and more money for higher-income earners.
“The Minister of Finance had an opportunity at the Budget Policy Statement to come clean about how her tax plan would be paid for. The Minister should provide that information to the public, bearing in mind we are just seven weeks away from the Budget, so the details should have been finalised.
“But what would be even better is if the Minister announced a plan to invest in public services, deliver economic growth, and abandon the currently unfunded tax cuts,” said Renney.