Govt spending attacked

Press, 27 September 1982, Page 15

Govt spending attacked

PA Auckland The Government's. own spending was one of the main causes of inflation in New Zealand, said economist and one-time National parliamentary hopeful. Dr Donald Brash.

Technically, that was easy to fix. but, politically, it was difficult because ft would mean the Government increasing the tax take 20 per cent or cutting its. spending 20 per cent. "The Budget deficit is put at $l9OO million this year,” Dr Brash said. “That means that is what the Government is spending more than it is taking in tax, despite the 3 per cent cuts it has been talking about.

"In absolute terms, it is more than before, but in relative terms $l9OO million is less than last year,” he said.

The same applied to the balance of payments problem. While in the year ended June. 1982, the deficit of $l5OO million was worse than the 1975 record in absolute terms, in relative terms the country was better off.

If the National Government had one success, that was the fact that the deficit had fallen from 50 per cent of export earnings in 1975 to less than 9 per cent of those

earnings bv the end of the 19705.

The Budget had dealt with the problems of the balance of payments and inflation to an extent. Dr Brash said, but there were areas in which he was disappointed. He supported Labour member of Parliament Roger Douglas’ call for the abolition of income tax and for a payroll tax if Mr Douglas’ payroll tax was. as he believed, the same as proportional income tax. "I favour proportional lax where income earners pay 25 per cent, no matter what they earn," he said.

The Budget had increased the tax take from the higher income earners. That would merely encourage those people to find ways of avoiding tax. said Dr Brash.