Labour leader Andrew Little says the Government is guilty of gross deception in the election campaign, accusing it of knowing it could not meet its promised surplus in the current financial year but continuing to promise it.
"I see it for what it is - one of the biggest political deceptions in a lifetime," he said in a pre-Budget speech to the Wellington Employers' Chamber of Commerce.
Mr Little said that National knew after the statutory opening of the books (Prefu) a month before the September 20 election that "deep down...they could not generate a Budget surplus in this Budget year".
"There wasn't enough milk money. There wasn't enough oil money. And as a result there wasn't enough tax money. But their promise was clear - their good economic stewardship would see us in surplus."
Last year's Budget, Bill English's sixth, forecast a $372 million surplus for the current year but that was downgraded in December's half yearly update to a deficit of $570 million. He still hoped a surplus could be achieved.
But last week Mr English confirmed that next Thursday's Budget will forecast it even higher deficit than that - the actual deficit wont be known until October.
Mr Little said National's promise "to return to surplus in 2014/15" sat proudly as its top commitment in its election material.
"They made that promise knowing about the current state of government revenue.
"They made that promise knowing the Government's revenue projections were worsening."
Mr Little argued that the economy was suffering from over-reliance on dairy and that the John Key-led Government should have directed investments into a more diverse range of economic activity.
"A different JK, John F Kennedy, once said that the best time to fix the roof is when the sun is shining. But our JK would rather leave the hole and take credit for the sunny day."
Mr Little said the economy was facing major headwinds including a $7 billion hole caused by falling milk prices, an economy that was dangerously reliant on old commodities, a property market in Auckland that was out of control and regions that had been neglected.
When National came to office, the economy was in a drought induced recession before the global financial crisis but Labour had left the country well positioned to face it.
After the GFC, during a period of high commodity prices and superior returns "should have been the very time to introduce measures to incentivise and direct investment into a more diverse range of economic activity.
Mr Little said that while National like to tell a simple story about its economic stewardship in Government, what had really happened was that:
- New Zealand was well prepared for the GFC and the earthquakes;
- Earthquake recovery artificially boosted NZ's economic performance;
- Record dairy prices carried the economy for a while;
- Long term fixes had been ignored.
"Our economy has to be so much more than milk and houses," he said.
"The untold millions that speculators have poured into Auckland housing could have been so much more useful to New Zealand in productive businesses.
He said the deep structural problems faced in New Zealand did not have any quick fixes.
"Anyone who tells you otherwise is a fraud.
"Tackling New Zealand's problems takes commitment, perseverance, vision, and the willingness to take risks," he said.
"Doing the right thing for New Zealand requires focus, not focus groups."
A responsible Government would deliver a surplus, a solution to the housing crisis, vibrant regions, and a plan to diversify the economy.