Press Release – New Zealand Labour Party
Kiwi taxpayers are paying a higher and higher price for John Key’s and Bill English’s mismanagement of the economy, with the cost of serving government debt rising sharply since the twin credit downgrade, says Labour’s Finance spokesperson David Cunliffe.Kiwis forced to pay for National’s mismanagement
Kiwi taxpayers are paying a higher and higher price for John Key’s and Bill English’s mismanagement of the economy, with the cost of serving government debt rising sharply since the twin credit downgrade, says Labour’s Finance spokesperson David Cunliffe.
“John Key and Bill English were blindsided by the Fitch and Standard and Poor’s downgrades in September, but tried desperately to downplay their significance in terms of the cost of borrowing,” David Cunliffe said. “Their comments lacked credibility then. They lack even more now. Yesterday’s government bond auction shows the cost of government borrowing has risen sharply since the double downgrade.
“Bill English claimed the downgrade would add 0.1 per cent to the cost of borrowing at the most,” David Cunliffe said. “Just how wrong he was is now emerging. Since the double downgrade, interest rates on new government bonds have risen by 0.2 per cent for bonds maturing in 2015 and 0.4 per cent for bonds maturing in 2023. “With National planning to issue $35 billion in bonds in the next three years, an increase of 0.2 to 0.4 per cent in interest rates will cost $100 to $150 million extra per year.
“Who’s going to pay that extra interest? New Zealand taxpayers will.
“Whose fault is it? Fairly and squarely, John Key and Bill English, that’s who. The twin downgrade was a fail mark on their economic management, and Kiwis are paying the price,” David Cunliffe said. “The deficit of $18.4 billion built up by National will now be even harder to manage with the cost of debt surging as a result of the credit downgrades.
“National continues to take the easy way out rather than make the tough decisions New Zealand needs,” David Cunliffe said.
“National has no plan to grow the economy and exports. It has no plan to create jobs. And this week it proved — through its rushed and one-off gimmick of possibly introducing KiwiSaver auto-enrolment in 2014-15 —that it has no credible plan to boost private savings.
“New Zealand has to save more to guarantee our future,” David Cunliffe said. “That’s what the credit agencies have been telling us. National is desperate to be seen to be doing something in savings, but its tinkering is not nearly enough. Just like asset sales, it won’t work. National hasn’t got the courage to make the right decisions for our future.”
Auhorised by David Cunliffe, MP, Parliament Buildings, Wellington.