Tax cuts still on Nats' agenda despite slowdown

John Key

National MPs say they still back tax cuts as a main policy plank despite an economic outlook that could be gloomier than expected.

National's finance spokesman John Key told MPs at a three day retreat in Taupo that Treasury's predictions of a mild economic slowdown could be hit by shocks sending unemployment higher than forecast.

Mr Key said today he also believed that the slowdown would force the Reserve Bank to try and drive down interest rates in September.

In the coming year National would look to policies that would boost economic growth especially those that boosted productivity.

Labour policy had been "tentative" on productivity growth and National would look to address this, Mr key said.

In other economic areas during the retreat, National MPs stuck to plans to deliver tax cuts through raising the thresholds at which people would pay higher rates.

Mr Key said some details could change but reducing tax remained a core difference between National and Labour.

A reducing Government surplus would make it harder to sell tax cuts to the public though Mr Key said there was obvious waste in Government spending that could be used to show they were achievable.

National would also look at alternatives to the Working for Families package but it was complex to find another way of delivering financial assistance to those trying to get by.

Mr Key said there would be no changes to National's support for payments into the New Zealand Superannuation Fund and retirement policy in general.

Finance Minister Michael Cullen is set to push savings incentives this year and Mr Key said National was sympathetic to the idea, but did not believe Dr Cullen's Kiwisaver accounts were the right way to go.

- NZPA