By Alex Tarrant
Labour Party leader Phil Goff is not fazed by racking up more debt than the government’s current projection in the short-term, saying credit rating agencies focus more on long-term projections that would show Labour paying down debt faster than National.
Speaking to media in Parliament on Monday afternoon, Goff attacked the government’s economic plan, which included selling state-owned assets and tax cuts for high income earners.
“The uncertainty that we have with international conditions at the moment is a worry, given the fragile condition of the New Zealand economy. Very clearly, we need to be doing a lot more in terms of planning for economic recovery," Goff said.
"The government has its head in the sand if it believes that just selling assets and borrowing to pay for tax cuts for the most well-off will be the answer to New Zealand’s precarious economic position. We need to do a lot more, that’s why Labour has released its plan – changes in monetary policy, changes in tax policy, getting R&D, upskilling our population. Those are the things we need for a really strong economy, and we do need a strong economy in such uncertain times," he said.
Global events were beyond the New Zealand government’s control, but domestic conditions were not, Goff said.
Asked whether Labour’s economic plan would require more borrowing in the first five years of its implementation, Goff replied:
“I think what’s true is that we pay down our debt and pay off our debt quicker than the National Party on our projections as compared to theirs.”
Credit rating agencies would look “far more positively on a situation where you have an ongoing source of revenue, not a one-off sale by the disposal of assets. That clearly isn’t an ongoing answer – you sell them once, they’re gone forever,” Goff said in reference to Labour’s positioning of its capital gains tax policy versus the government’s planned asset sales.
Pushed on the debt track over the first five years of Labour’s plan, Goff replied:
“What I’m saying is that we will pay off our debt faster, and what the credit rating agencies will look at, is what the overall scheme of things is, and the pay-down of that debt. Labour has a very credible plan, and it’s interesting National hasn’t actually attacked the credibility of that plan.”
Credit rating agencies would look at the government’s whole debt track, as they were used to looking at things long-term.
“It’s only politicians and journalists that look at things in the very short-term,” Goff said.
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