Zero Budget means zero growth - Shearer

David Shearer says austerity is not the answer. File photo / Mark Mitchell

The National Government's "zero" Budget this week is a recipe for zero growth, Labour leader David Shearer said last night ahead of a pre-Budget speech he is to give in Christchurch today.

Mr Shearer's address to the Manufacturers and Exporters Association will argue the Budget won't do enough to grow the economy, and New Zealanders are working harder than ever but not getting ahead.

Prime Minister John Key and his Finance Minister, Bill English, have promised a zero Budget on Thursday, with little or no new spending - which will keep debt under control and see the Crown's books return to surplus by 2014-15.

But last night, Mr Shearer said "a zero Budget means zero growth in our economy". He said it was "interesting" that G8 nations at their meeting over the weekend appeared to be getting behind a growth agenda rather than continued severe austerity, "and in New Zealand, rather than a growth agenda, we have an almost zero growth agenda and it's not going to be able to deliver".

And while austerity was not the answer, the National Government was failing to address long-term fiscal problems, "for example that we have an ageing population that's going to cripple us economically in the future unless we do something about it".

Other key challenges the Government was unwilling to tackle included the export-crushing exchange rate and a tax system that favoured speculation over the productive sector and innovation.

In today's speech, Mr Shearer will also attack the Government's partial asset sales plan as removing an important revenue stream for the country.

Last night, he said National was setting a limited goal, "which is to get the Government's books back into the black, which they will likely do, and we would aim to do exactly the same thing".

"But that's setting the goalposts very, very short. It's not looking at what the big issues facing the economy are and addressing them."