KEY POINTS:
A National-led government would choke interest rates by reigning in state spending and boosting the economy's productive sector, finance spokesman Bill English says.
Speaking to delegates at National's annual conference today, Mr English attacked Finance Minister Michael Cullen's handling of the economy - blaming his loosening of the Government's purse strings for the most recent round of interest rate hikes.
Reserve Bank governor Alan Bollard has listed government spending alongside a rampant housing market, debt-fuelled consumer spending and record dairy prices as reasons for four consecutive rises in the Official Cash Rate.
Mr English promised that National "keep interest rates lower" by restraining government spending and by growing the productive sector through measures like tax cuts.
He attacked Labour's suggestions that squeezing growth in government spending equated to public service cuts.
"We are going to bring some discipline to government spending," he said.
"It's nonsense to say this is cutting spending. It is spending wisely."
Over the next five years the government would spend around $300b, he said.
"If we can spend this money just 1 per cent more wisely, then that is $3b more of public services for New Zealand."
Examples of Government waste were $200 million spent on developing the idea of a single-core benefit and a state sector hiring binge that had seen the number of staff earning over $100,000 rise from 500 in 2000 to 3000 now.
Mr English said National was committed to an ongoing programme of tax cuts and would also pay for some public infrastructure projects through long-term debt - both measures that inject extra money into the economy.
He did not state what reductions in spending growth would be required to offset the two measures and prevent interest rates from rising.
However he stressed the party could not afford to make extravagant promises it could not keep.
The party had fallen into that trap on both of the last two occasions it entered government - both times almost losing the next election as a result.
"Every pledge we make must be credible, every promise must be fulfilled."
But he said it appeared Labour's three-term run was coming to an end.
Prime Minister Helen Clark and Dr Cullen represented the "end of an era in New Zealand politics", he said.
That era began in 1984 with the reforms of the fourth Labour government, carried on through the 1990s and Miss Clark's government, which was fixated on reacting against the reforms, was the final chapter.
By contrast, National, under leader John Key was forward looking.
Mr English also attacked the Government's electoral finance legislation which he said was designed to silence Labour's opponents.
National's conference runs over the weekend in Auckland.
Mr Key, who is attending his first annual conference as leader, will speak tomorrow morning.
- NZPA
