The deteriorating state of the Government books show that New Zealanders are hurting from the combination of the economic downturn and the Government's inadequate action to counter it, Labour Finance spokesman David Cunliffe said today.

"Job losses and a sharp drop off in consumer confidence have contributed to the sharp decline in Government's tax take," David Cunliffe said.

"Corporate tax, personal tax and GST have all fallen and National must take some of the blame for that.

"The Government's inability to take a co-ordinated approach to both protecting jobs and stimulating the economy through tax cuts has only worsened the pain that many hardworking New Zealanders are experiencing.

"John Key's jobs summit has so far proved ineffective and as a result, increasing unemployment has seen the Government's books take a $200 million hit.

"Combined corporate tax and GST intake has also fallen $1.2 billion. National had a perfect opportunity to stimulate the economy with its April 1 tax cuts. Targeting them at lower income earners who would have spent them on necessities would have given the economy a much need push.

"National though was short sighted and failed to take that opportunity and instead skewed tax cuts to those on higher incomes.National has failed to take strong action to ease the pain of New Zealanders who are really feeling the pinch.

David Cunliffe says National's plan to suspend Superfund contributions is also short-sighted. It made gains in March and is a crucial long term investment for New Zealand's baby boomer generation.

"One encouraging sign is that the Government's overall debt position seems to be stabilising," David Cunliffe said.

"The deterioration in both net and gross debt has eased. With that in mind the Government should be very cautious of making inappropriate balance sheet measures in the upcoming budget.

"That course of action will only make the recession worse for New Zealand," David Cunliffe said.

The government's Financial Statements for the nine months ended 31 March 2009 were released today.

The operating balance for the nine months to March 31 was a deficit of $7.72 billion, $11.2 billion lower than the forecast surplus in the Pre-Election Update - which seems a long time ago now.

The main contributors to this result were lower than forecast tax revenue ($1.9 billion), higher than forecast investment losses ($5.3 billion), and actuarial losses on both the ACC insurance liability ($2.0 billion) and the super fund pension liability ($2.4 billion).

Gross debt continues to be significantly higher than forecast in the Pre-Election Update at $45.0 billion (25.1 per cent of GDP).

The new government's first Budget is released on the 28th of this month.

- NZHERALD STAFF