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Key defends zero Budget

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Latest Political News | Monday May 21 2012 8:54

Key defends zero Budget

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Budget week has kicked off with opposition parties accusing the Government of failing to take the country forward.

Greens co-leader Russel Norman released his alternative budget and a report carried out by BERL Economics on the government's partial asset sales programme.

"The Government's financial situation cannot be used as a justification for partial asset sales, because if course it makes the Government's financial situation worse, not better," he says.  

Labour leader David Shearer says it's time for new and strong economic leadership.

"You will see the Government become less popular as people realise that they have really nothing to offer New Zealanders. In the last few years they've promised economic growth, every single year, and every single year they've failed to deliver."

With the Budget looming, the Labour opposition is putting the boot into the Government's economic performance

Leader David Shearer says the Government has failed to make the tough decisions about New Zealand's economy.

He says that's why we've got a zero budget which equals zero growth.

"Which equals about 50,000 people going over to Australia every year which is a record. We've got 50,000 people more on benefits and we've had the worst economic growth in New Zealand's history for the last 50 years."

John Key's defending his zero Budget, saying if the Government spends more than it has, then the country will end up like Greece.

"I noticed this morning David Shearer saying well zero Budget means zero growth. Well that may be what the Labour Party think that the only way to grow an economy is to spend money you don't have via taxpayers but in fact, the way to grow an economy of course, is with an vibrant economy."

Mr Key says that involves a private sector which can get things done.

David Shearer's to deliver a speech early this evening in Christchurch to the New Zealand Manufacturers and Exporters Association.

Meanwhile Greens co-leader Russel Norman has released a report which says the Government's state asset sales programme will leave the economy permanently worse off.

The report was carried out by economist Ganesh Nana from BERL (Business and Economic Research Limited).

"We wanted to commission some independent research from BERL looking at what will be the Budget or fiscal implications of asset sales because we're pretty concerned that actually it will be very, very negative for the Government's position," Mr Norman says.

And the Green Party wants the company tax rate reconsidered

Mr Norman says the Government's original argument in setting the tax rate at 28 cents was that we had to match Australia.

"Australia hasn't gone there, they've stayed at 30 and also Inland Revenue made it very clear that the reduction in the company tax rate wasn't attracting overseas investment so it's hard to see what the justification remains for putting it down to 28 cents."

Mr Norman says his party's policy would be to put the company tax rate up to 30 cents in the dollar, while the post-quake rebuild in Christchurch is carried out.

New Zealand business is strongly supportive of the Government's zero Budget approach.

That's according to the latest MYOB business monitor survey of over a thousand small to medium sized businesses.

General manager Julian Smith says that more than two thirds support an increased focus on cutting Government expenditure to ensure the country returns to surplus faster.

"The key message I think is that businesses want the Government to live within it's means."

In addition, another hike in the price of tobacco could be on the cards when the Government delivers its Budget on Thursday.

A three phase increase in the price of tobacco was introduced in the 2010 Budget with this year being the last stage of a series of 10 percent price increases on cigarettes.

The Government's coy on specific details, but so far hasn't denied there's more to come.

There's speculation it intends further increasing excise rates on cigarettes and loose tobacco.

Photo: John Key (Getty Images)

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