After six years of good economic weather, things are finally starting to go sour. National of course places the blame squarely on the government, with finance spokesperson John Key saying that the government has
fuelled inflation by massively expanding government spending since 1999, which in turn has fuelled interest rates that are now the highest in the Western world.
Unfortunately for Key, the actual numbers tell a different story. Here's some figures from the "fiscal outlook" sections of the 1999 Budget Economic Fiscal Update (National's last budget) and the December 2005 Half Year Economic & Fiscal Update (where we are under Labour):
|1999 BEFU||2005 HYEFU|
|Core crown revenue||34.5%||34.5%|
|Core crown expenses||35.1%||30.6%|
(Source: Table 2.1, 1999 BEFU, and Tables 2.3 and 2.4, 2005 HYEFU. To avoid any doubt, I am using the "1999/2000 Projection / Budget" and "2005 Actual" columns. All figures are as a percentage of GDP).
Massive expansion of government spending? I wish. In reality, the government has been extremely tight-fisted, funnelling surplus revenue into the Cullen fund, paying off debt, and rebuilding infrastructure after a decade of underinvestment under National. While there has of course been an increase in nominal terms, Labour are actually spending less as a percentage of GDP than National was in their last year in office - and taxing us less to boot. But clearly John Key doesn't see why these facts should be allowed to get in the way of a good smear.