Deficit before social policy—Cay gill

Press, 26 July 1989, Page 1

Deficit before social policy—Cay gill

By

PATTRICK SMELLIE

in Wellington

Further concentration on social policy would be possible once the Government had achieved a true financial surplus, the Minister of Finance, Mr Caygill, said yesterday. In a pre-Budget speech which hardly mentioned the Budget, Mr Caygill said the Government was well on track for reducing its financial deficit and repaying debt

“In future, however, we should be looking at financial surpluses along with asset sales,” he said.

“At that point we will be able to divert our attention to more social areas.”

Speaking to the Society of Accountants, Mr Caygill said the pressure of tax reform would now start to ease “as we move to tidy up some tax legislation and fill in the odd gap.” One such “odd gap” was the imposition of a capital gains tax.

The Budget would reaffirm the Government’s general economic direction, with low inflation, lower Government debt, and building on the

“gradual economic recovery now under way,” he said. The Opposition spokesman on social policy, Mr Simon Upton, said yesterday the Prime Minister, Mr Lange, was crazy to compare this week’s Budget with the first Labour Government’s social policy reforms in 1938. “Mr Lange’s attempt to cast himself as Michael Joseph Savage demonstrates a vanity which must really offend the remnants of Labour’s supporters,” he said. “In 1935 Labour was elected

to get New Zealand out of an international slump,” he said. “In 1989, New Zealand is struggling to recover from a slump caused by the Labour Party. Mr Savage had inherited a society paying much less tax than today, and with a strongly independent work ethic. “A big-spending 1938-type Budget will cost the average New Zealander dearly with no guarantee of an improvement in social services. “All Mr Lange is likely to do on Thursday is redivide a cake which hasn’t grown,” Mr Upton said. '