Adam Bennett

Adam is a political reporter for the New Zealand Herald.

Labour plans faster debt payoff

Labour Party leader Phil Goff. Photo / Mark Mitchell
Labour Party leader Phil Goff. Photo / Mark Mitchell

Labour would borrow $4 billion more than National over the medium term leader Phil Goff said this morning as he unveiled his party's keenly anticipated fiscal framework this morning.

"I'm not Jerry McGuire, but I am here to show you the money today", Mr Goff told reporters - a reference to Prime Minister John Key's attack his policies in an election debate earlier this week.

But Mr Key said Labour's claim that it would only borrow $4b over the next four years was a "shambles",

Labour has already said its borrowing would exceed Nationals by no more than $2.6 billion over three years.

This morning Mr Goff said Labour's borrowing relative to National would peak at $4 billion in the 2016/2017 financial year.

"But from 2017/2018 we will be paying back the debt faster than a National Government would because of the ongoing asset returns and the increasing revenue of our fairer tax package", he said.

Finance spokesman David Cunliffe said the fiscal strategy "is an integral part of a broader economic plan that will address the underlying structural problems facing the New Zealand economy: high private debt, low savings, over investment in property and an aging population."

Turning to National's attack that Labour's plan would see $17 billion more in borrowing under a Labour Government, associate finance spokesman David Parker said National had not recognised the loss of dividends from selling half stakes in state owned enterprises in its figures - money that Labour would keep.

Labour had also counted the money borrowed for $6 billion in NZ Super fund contributions as neutral in terms of net debt as the money resulted in a corresponding asset.

The other big item was the difference in view as to what gains in tax revenue could be made by ring fencing losses on property investments.

Labour, this morning, as National has done, claimed their numbers were based on Treasury advice.

Labour's number were criticised by National, with Mr Key saying Labour was not accounting for $6b it wanted to put into the Cullen Fund.

"If you take the New Zealand Super fund, for example, he's saying if you have a mortgage against your home, that [debt] doesn't count and the day you buy the house, you should book the profits of what you think you might be able to sell the house for some time in the never-never.

"And he's wanting New Zealanders to believe that's real, at a time where we're living through the most volatile financial markets and stockmarkets in the world.

"It might be a form of economic management that Greece is happy with, but it will not work in New Zealand."

He said Phil Goff was trying to pull the wool over the public's eyes with some "mythical profit".

"If it's such a great idea and so guaranteed despite the fact that the world's stock markets are more volatile now than ever before, why doesn't he go and borrow $100b? Is he telling New Zealanders that when they borrow money against their house, it doesn't count, and they should go and spend the money today that they might one day make, even though they don't know what the property market's going to be like in four years' time?"

Mr Key again played the "I spent my life as an investment banker" line to talk up his financial literacy.

"The definition of borrowing is where you issue a bond. Ask Phil Goff if he'll be issuing bonds for $4b, or a lot more than that."

He said restoring ECE centres to having 100 per cent trained staff would cost $400m a year, and the Government only has $800m in new operating money a year.

"Their numbers don't add up. They're using a Greek calculator."

"Anyone with a probably form 2 level understanding of accounting " could see that Labour was borrowing at least $10b.

"Whether it's ultimately $14b or $17b, I don't know, but if it's $4b, I'm a monkey's uncle ... It really is farcical."

He said he would not borrow to put more money into the Cullen Fund, and would wait until returning to surplus before doing so.

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n6 at 18 Sep 2014 05:12:50 Processing Time: 479ms