In my Budget Speech in Parliament last fortnight, I said that the National Government’s 2011 budget was driven by a set of principles and ideologies that were different from those of the Labour Party.
The Budget is based on its Article of Faith that giving tax cuts to those who are relatively well off financially will grow the economy sufficiently to create jobs.
The Government believes that it is just and fair to give tax cuts that increase the incomes of those at the top, while giving a very small tax cut in dollar terms to those on low or modest incomes.
The Government is telling us that it is fair to raise the GST to 15%, one of the highest consumption taxes in any country, and that the tax cuts will compensate those on low incomes in exactly the same way as it does those on higher incomes.
It is an Article of Faith for this Government that the private sector does everything more efficiently than the State sector, conveniently forgetting billions of dollars that the State spends to bail out failed private companies and on buying back privatised state assets that the private sector has bankrupted.
They believe that the State has no business owning assets, regardless of their strategic importance to New Zealand and thus to the common good.
It is an Article of Faith for the National Government that the State sector must be kept small and if it grows in size with a larger population or the need to address growing social demands from our children, our families, our elderly, our sick and others, it must then be bad.
According to (Prime Minister) John Key, citizens experience problems of living primarily because of the choices they make; not because many are driven to it by circumstances largely beyond their control. This has led the Government to take a punitive approach to much of its social policy.
This ideology, pursued over the last three budgets, has actually created problems, which a future Labour-led Government will have to address.
The Government has created a huge financial hole for itself by giving over $20 billion in tax cuts over the next four years.
The Government knows it will not recoup this from the increase in GST as anticipated. To balance its books, this Government has gone on a borrowing spree, second to none.
It will also sell our strategic state assets, which will inevitably end up in overseas ownership. Their tax take is significantly lower and they have to borrow to make up the short fall and they are presiding over the largest deficit New Zealand has ever seen.
Future generations will have to pay this back and, as usual it would be left to a future Labour Government to do so, as did the Helen Clark-led Government, after coming to power in December 1999.
These are the policies that are now resulting in deep cuts to government expenditure, not the inefficiencies in the state sector, as they are parroting at every turn in Parliament.
A Fairy Tale
John Armstrong of the New Zealand Herald described the Budget’s growth predictions as “a fairy tale of high hopes on a frayed thread.”
He was right. This description does apply equally to the whole budget.
The projection that the economy will return to surplus in 2013 is based on hope, unjustified optimism, and magic, not reality.
This National Government has conducted an unprincipled defence of its ideology and ensuing programme. It has been neither courageous nor intellectually honest in accepting the impact of its policies and decisions.
Despite what this Government says, they and the public know that the last Labour Government paid the country’s debt left behind by its preceding National Government and saved for a rainy day.
The National Government could have managed through the recession with a headroom it had in the economy bequeathed to it by the last Labour Government.
Labour on the other hand is driven by a different set of principles.
It believes the wealth and resources of a country are created by all its peoples and the benefits accrue to them all on a just basis.
Labour’s policies are based on its conviction that we ought to invest in the generation to follow us and to leave them all in the best place possible to take this country to new and greater heights.
Nowhere can this be seen more clearly than in our policies on children, a decent wage, owning our own future and not selling our assets, investing in smart research and development that will grow this economy, address poverty and hardship without punitive and cynical policies, and on an excellent public health and education systems.