National News Brief, Tuesday October 7

All the news from the new Treasury forecasts; pressure on National's tax cut plans; house prices to bottom-out in March; what did John promise Pita?; and more

  • Treasury's pre-election economic and fiscal update (Prefu) makes for grim reading across all the front pages.The Dominion Post's Vernon Small writes that "The country is facing a decade of deficits and the kitty is almost empty for election bribes, the Treasury's books show". Treasury Secretary John Whitehead forecast growth of just 0.1 percent for the year to next March, unemployment rising to five percent by 2010, and a budget deficit of $1.7 billion next year after nine years in the black. As Brian Fallow points out in the Herald, those books aren't bad by current international standards, but given the worldwide credit crunch they could get worse.
  • Most of the focus however is on the political, not the economic, repercussions of the news. The Otago Daily Times' lead says"Only a slashing of government expenditure or an increase in borrowing will enable National to make its planned tax cuts after Treasury yesterday reported that years of financial surpluses will turn into deficits until 2013 at least". The Press reports that both parties are looking to save money by scarpping the $600m promised to the Ministry of Foreign Affairs and Trade, adding, "National's tax cuts are expected to add $6b to the $10b Labour has pledged to spend, but the Treasury says there is as little as $496m in total available for new spending in the next financial year." John Armstrong writes that the "bloodbath changes everything", but John Key was yesterday still insisting that tax cuts are vital to help the economy recover.
  • The Treasury expects house prices to hit rock-bottom in March, down anywhere between another 10 and 25 percent, the Herald reports.
  • The Herald digs into the forecasts to pick where Labour might be planning campaign promises. It comes up with schools, paid parental leave, and helping families buy new homes.
  • In other news, critics have ridiculed National's "two strikes" crime policy. Prison guards say it would make prisoners unmanageanly violent, while Corrections minister Phil Goff says New Zealand would end up like America spending millions on prisons "full of geriatric people".
  • The Greens will this week announce a list of policy criteria on which it would choose a potential coalition partner, and Helen Clark says she'd like that to be Labour.
  • John Key and Pita Sharples disagree on whether or not National really plans to abolish the Maori seats.
  • The company constructing the South Island's tallest building has gone into administration, owing an estimated $10m, says the Press.