Govt. can reduce debt with higher quality spend

The Government’s fiscal position can be made stronger by following it’s own advice to households — invest in higher quality assets, the Green Party said today.

 

“Pouring billions of dollars into new motorways with low benefits is the Government equivalent of households buying flat-screen televisions to grow their wealth,” said Green Party Co-leader Dr Russel Norman.

 

“Investing the vast majority of the Government’s transport budget into new motorways with low benefits is a poor-quality spend making the economy more vulnerable to economic shocks, rather than more resilient.”

 

New Zealand's economy is vulnerable to high oil prices because the transport sector is reliant on imported oil. Oil and vehicles make up 30 percent of the country’s total imports.

 

“The smart solution to both congestion and high oil prices is to invest in rail, buses, walking and cycling.

 

“If we want to emerge from this economic downturn with a resilient, sustainable economy, then investing in alternatives to roads is the way forward,” said Dr Norman.

 

The Government also needs to borrow to fund their $16.7 billion package of tax cuts over the next four years.

 

“Tax cuts that go overwhelmingly to the wealthy are another example of the Government’s poor economic judgement. Levels of income tax are not a significant factor in economic prosperity, and there is no strong evidence that lower taxes assist economic development.

 

“On the other hand, there is a wealth of evidence that the widening inequality these tax cuts will fuel hurts everyone, rich and poor alike. The more unequal a society is, the higher its rates of crime, mental illness, obesity, and incarceration.

 

“Bill English’s vision for a prosperous New Zealand seems to rely on having corrections expenditure become one of the main drivers of economic growth.”