There will be no election year lolly scramble, says Finance Minister Michael Cullen. Photo / Richard Robinson
There will be no election year lolly scramble, says Finance Minister Michael Cullen. Photo / Richard Robinson
KEY POINTS:
Finance Minister Michael Cullen has defended himself against criticism he is planning an election year lolly scramble.
In speech notes prepared for an address to the Business Council for Sustainable Development, Dr Cullen said many commentators had adopted the opposition's language around "so-called election year lolly scrambles".
"Overall,there is a growing assumption in many quarters that next year's budget will not be focused on the long-term," Dr Cullen said.
"All of this is a myth, and all of it needs to be laid to rest. The Labour-led government governs and budgets for the long term. We will not back away from that stance, especially in election year."
Dr Cullen repeated assurances that "we will move on personal tax next year", but said tax policy could not be isolated from economic and fiscal policy.
Tax cuts would be in line with Labour's ongoing economic and social priorities.
"This will not be a one-off policy that seeks to end a debate."
He repeated his four rules for tax cuts - no borrowing or service cuts to fund them, they must not "exacerbate" inflation and must not create greater inequalities.
In the speech, Dr Cullen also touched on one of his long-running concerns - unsustainable growth in health spending.
He argued that the talk of a crisis in the health sector was much exaggerated with New Zealanders getting good value for their money.
"We are investing more and getting more," Dr Cullen said.
"It is also true that current growth in health spending cannot be maintained without cuts in other areas or significant increases in tax rates - neither of which are tenable."
Since Labour came to power in 1999, the health budget had increased by 99 per cent.
Treasury estimated that the current path of annual increases of 8 per cent would lead to public health expenditure increasing from 6 per cent of GDP to around 33 per cent by 2050.
"This is not sustainable."
Dr Cullen said he was not talking about cuts but slowing the rate in growth and getting better value for money.
The outgoing minister of health Pete Hodgson had managed to contain the growth in health spending to $750 million a year.
"A considerable amount, but as you will see in the media every day, not enough to satisfy well-meaning health lobby groups."
