Cullen Michael: Financial Review Debate — In Committee 
Cullen Michael: Financial Review Debate — In Committee 
[Volume:624;Page:19386] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 After 2½ years in Parliament Mr Key has finally become a true member of the National Party. In other words he cannot remember what he said 2 weeks ago in terms of what he is saying today. And that is the National Party all over. Its members have spent the 2½ years since the last election saying that “Uncle Scrooge Cullen” is running huge surpluses—massive surpluses—and is dragging resources out of the economy. Mr Key is nodding again; he remembers saying that. He was saying only a couple of weeks ago that we were dragging economic resources out of the economy unnecessarily and that there was plenty of room for big tax cuts and for all the spending promises on law and order and everything else that his colleagues keep making all over the place. They have a big doozy one coming up on Friday of this week of half a billion dollars - plus a year. That will come out from the National Party as its next promise. We are just a bit shocked about that—the National caucus leaks so badly that we know when announcements are coming out on key matters. 
But suddenly this week Mr Key has understood what I have been trying to say for the last 2 or 3 months: that in fact we do not have a large amount of fiscal headroom at all. There is no room for large tax cuts unless—and this was the hidden message of Mr Key’s speech—there is a major slashing of Government expenditure. Unless we cut back— 
Hon Member 
: Which one? 
Hon Dr MICHAEL CULLEN 
: Oh it has to be the biggies! There is no point in fiddling around with the Ministry of Women’s Affairs; that will not address the need for tax cuts. The cuts have to be in health education superannuation law and order or defence—all the big items of Government. But what have National Party spokespeople said in terms of all those areas? The Government should have agreed to anything that nurses asked for in pay increases according to the National Party’s health spokesperson at the time. National says we should increase the number of police all over the show. In fact there should be more police than non-police in our society if one listened to the National Party on occasions. National also says we should double the amount of money we spend on defence and buy everything we possibly can for it. We should increase our overseas aid of course. We should spend more on this that and everything else— 
Darren Hughes 
: And cut taxes too. 
Hon Dr MICHAEL CULLEN 
:—and have big cuts in taxes at the same time. But Mr Key now says this Government is feeding too much demand into the economy. Well we just cannot have it both ways. That is exactly what putting a Budget together is all about. It is not a series of exercises in wishful thinking. It is not a matter of going around all one’s caucus colleagues and asking them to say exactly what they would like of doubling it and of then seeing whether it adds up. 
I will issue this challenge to the National Party time after time over the next few months: when that party produces an alternative Budget based upon the Government’s own tax model and based upon the same economic assumptions—as Labour did when in Opposition— 
Clayton Cosgrove 
: Costed properly. 
Hon Dr MICHAEL CULLEN 
:—and when it is all costed properly and it all adds up then we may believe a word the National members say. But in 2002 National flunked that basic test; it refused to issue an alternative Budget. I ask Mr Key whether after this year’s Budget when he has all the economic data he will put up an alternative Budget. Oh yes he nods. Right—we have that on record. We will need to see then where the cuts will be made in order to pay for his programme in terms of tax cuts and the diversion of expenditure out of excise duty and to pay for all the other things the National Party will promise over the next few months. 
Of course 25 new camping grounds on Department of Conservation land may pay for all of that—I do not know. Who knows what National may have in train for that department when it comes to those sorts of proposals? That just will not do as a programme for an alternative Government. But it tells us that the National Party is not an alternative Government. National is just a party that hopes to claw back some ground in this election so that it may win a position by 2008 in order to look like an alternative Government. The danger of course is that it may just fluke it if it does that—just as Muldoon did in 1975 when he was lumbered with the superannuation promise that was part of why we had to do the things in the 1980s that we did in terms of restructuring. 
So I say that this debate needs to be about the true realities. I can tell the Committee that on the present projections around net debt and gross debt for the out-years we are looking at a relatively flat percentage of GDP. There will not be a big decline at all in net debt or gross debt as a percentage of GDP. There will not be room in this year’s Budget for the big-spending promises that nearly every other party in this Parliament wants to engage in on both the revenue side and the expenditure side. There will have to be some doses of cold realism amongst all kinds of other parties in order for them to make any sense at all.