National finance spokeswoman Amy Adams has warned the coalition government it will be held to account over any broken promises in this Thursday’s budget.
Ms Adams says during the election campaign Labour and its support parties created high expectations.
“They had bullish and open-ended promises about what they would do and what they thought needed to be done. They had a number of commitments they made to New Zealanders and they created very high expectations in wage rounds. That’s what they used to get elected. If they’re going to be honest with the people of New Zealand that they’re not going to break trust in their first budget, then they need to deliver on what they said.”
National has repeated its criticism of the government’s decision to scrap tax cuts it had put in place last year, which would have reduced the average tax burden for families by about $1000 a year.
Ms Adams says Labour got rid of those tax cuts even though it faced large and growing budget surpluses. In contrast in Australia, which still faces deficits, the two major parties are arguing over which would cut taxes the most.
“Remember this is not government money. This is the money of hardworking New Zealanders the government’s helped itself to. And we’ve got an obligation not to take any more than the government absolutely needs so, when the government is taking more than it reasonably needs, it should return a bit to the people who earn it.”
She says that is the view in Australia but New Zealand is going in the opposite direction. Not only has the coalition government cancelled National’s tax cuts, it has also imposed new taxes that will put a significant burden on people over the next four years.
The government, however, scrapped National’s tax cuts so it could afford its families package. The Treasury estimates this will increase the weekly incomes of about 384,000 low and middle-income families on average by $75 a week, or $3900 a year, once it is fully implemented in 2021.
But Ms Adams says even before the budget has been delivered the government has broken its promise over tax.
“You make prosperity as a country from having a strong economy, not by taxing and taxing and taxing more. In fact, if you try to create government wealth to pay for things through more tax, you kill the economy.”
She says what New Zealand has done well, particularly since the global financial crisis, has been to ensure the economy is strong and growing. That has helped increase the tax take and provide the government with more money to spend.
“Before any new taxes this government is already looking to get an extra $20 billion a year in tax revenue over the next four years because we’ve got a strong economy.”
In the December half-year economic and fiscal update the Treasury forecast core Crown tax revenue would rise from $75.644b in 2017 to $97.815b in 2022.
Ms Adams says if people are taxed more heavily those who are upwardly mobile and those with skills will simply move to Australia where effort is rewarded and not punished.
She says the government had already made some poor spending decisions, such as making the first year of tertiary education free. Despite the $2.8b of spending not one extra student has taken up tertiary education.
“Yet they’re telling us they don’t have the money to fund the Roxburgh children’s camps, they haven’t got the money to follow up on their promises of cheaper doctors’ visits.”
Ms Adams says the government’s priorities have to be questioned.
“When they can put a billion dollars into the foreign affairs budget and prioritise more diplomats and a new embassy over cheaper healthcare for New Zealanders, when they promised them that, I think you really have to question all their big talk about looking after the vulnerable starts to become a bit illusory.”
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