Garth George: Of course tax cuts are on - the evidence is irrefutable

It seems to me that the Government, which for so long has been, as they say, Teflon coated, is losing its grip. In an election year, when it could be expected to be sure it had all its ducks in a row, it has been embroiled in one controversy, knee-jerk reaction and backdown after another.

And to top it all off - so far, anyway - came Michael Cullen's Budget.

Right from the start the Deputy Prime Minister has impressed me. He is an astute politician, never seems to be fazed, he is quick of mind and ready of wit and his pronouncements are generally plausible.

I saw him in the flesh for the first time about a month ago in the cafe in Parliament Buildings when I was having lunch with our crack parliamentary reporting team. He had a healthy colour and looked fresh, cheerful and energetic, which considering his punishing workload came as something of a surprise.

So why he would come down with a Budget of such mediocrity and miserliness just months before an election I can't imagine.

I suppose I shouldn't have been disappointed. After all, this man who is the linchpin of the Labour Administration, without whom I doubt it would have lasted one term, has given every indication that he is just another tax-and-spend socialist.

By my reckoning he has introduced at least 15 new taxes in the six years he has been Minister of Finance and has presided over a vast increase in the percentage of Government spending relative to our gross domestic product.

It has gone up something like 25 per cent (to some 40 per cent) in that time.

Then there has been higher inflation, rising interest rates and a substantial increase in the value of our dollar. And a succession of rather large surpluses, which are evidence of nothing but that the Government is taking too much in tax. Right now he is sitting on a fortune in anybody's language.

So no matter how often and how forcefully he tells us that personal income tax cuts aren't on, I and hundreds of thousands of other New Zealanders just don't believe him. The reason is simple: all the evidence points to the contrary.

Dr Cullen's mantra that tax cuts would inevitably lead to cuts in the likes of education, health and welfare are specious. It might be credible if those areas were operating more efficiently and effectively. But they are not.

And the reason for that is simple, too. In the past six years the bureaucracy has increased by thousands - another hallmark of socialist policy - and every dollar spent on these regiments of bean-counters, number-crunchers and paper-shufflers is a dollar not spent at the frontline, or the coalface if you prefer.

So the Administration's boast of spending this much more on education and that much more on health and welfare is empty. Sure the money is being spent, but not where it is most needed. Any claimed improvements in the services provided are invisible.

Dr Cullen and his colleagues make much of the Working for Families and compulsory workplace savings schemes, although neither will fulfil the promises made for it.

What really annoys me about the families scheme in particular is that it is nothing more than a subsidy to business and its main effect will be to keep wages down in this parsimonious low-wage country of ours.

The Labour-led Government would have been much better to have, for instance, doubled the minimum wage. What fun it would have been to hear big business scream blue murder just because the greedy, mercenary buggers were forced to pay people a living wage.

But the Government - like all of its social engineering type - is wedded to the view that it knows better how to spend our money than we do. Thus, instead of tax cuts and wage rises, we get handouts over which the Government has control.

You see the point, don't you? He who pays the piper calls the tune, and the more the Government can make us beholden to it - or a substantial proportion of us anyway - the more we are likely to keep it in power.

Another thing that amuses me is the insistence that across-the-board tax cuts would benefit the "rich" and do little for the poor. That, of course, is nonsense. Tax cuts could easily be structured to give everyone a proportionate increase in disposable income.

I don't know how Dr Cullen, Helen Clark and others with financial/social portfolios can sleep at night knowing that hundreds of thousands of New Zealanders exist on subsistence wages.

And as for those whom the Government considers "rich" - people on $60,000 a year or more - they are not rich at all and in any other developed country would be considered very much middle-income.

Yet Dr Cullen and co have the temerity to demand that we save more. What a disgusting joke.

At the other end of the spectrum we have Act and Rodney Hide promising insupportable tax cuts which would see public-good services pared to the bone. That is an even more disgusting joke. In fact, that far-right Douglas-Richardson economic ideology makes me sick.

Just as well that Act will disappear from the political landscape come election day. We need that sort of laissez faire capitalism back in this country like we need an outbreak of foot and mouth disease.

In the meantime Dr Cullen would do well to start thinking about a supplementary Budget.