Smart readers will have noted Labour have been very careful not to rule out tax increases after the election. They have said they will not reverse their current tax cuts, but they have left open introducing new taxes, or a new “rich rich prick” tax rate of 45c for those who earn over $100,000.
The Herald reports that Labour have basically already spent their contingency spending money for the next three years. This means that if Labour is re-elected they will either have to go through three years of making no spending promises or they will put up taxes.
Yesterday Dr Cullen said strong leadership was needed to ensure the overseas crisis did not lead to a “depression” in New Zealand.
“Labour is simply not prepared to let that happen,” Dr Cullen said.
“We will bring forward spending on infrastructure to create real jobs and build the potential for future growth … now is not the time to slash spending as our opponents are proposing.”
The hypocrisy of these statements are massive. Up until a few weeks ago Dr Cullen was attacking National’s plans for increased infrastructure spending. Cullen and Clark said it was madness and lunacy. They have done the mother of all u-turns.
But he also gets it wrong about “slashing spending”. Yes National will look to eleiminate some low quality spending – but the major change it is making is reducing the amount of money going into KiwiSaver in the short term. Now Dr Cullen is saying that in a recession you need increased activity to help you out of it – well that is exactly what National are doign by temporarily diverting some money from savings into spending and tax cuts – both of which help minimise a recession.
So by Dr Cullen’s own logic, National’s policies will provide a greater short-term stimulus to the economy. You save more in the good times and you save less and spend more in the tight times – exactly what National is doing. Cullen just can not admit that his 4%/4% KiwiSaver policy is nno longer suitable for today’s economic climate – it was a policy for when we had massive surpluses.Tags: government debt, government spending, Labour, tax increases