”As BNZ said last week “The budget is the straw that broke the camel’s back in terms of our view on the official cash rate.”

“Labour is already trying to distance themselves from tomorrow’s decision. Both Grant Robertson and Chris Hipkins have cited the cyclone recovery as the reason for the budget blowout. But as Adrian Orr has previously said “monetary policy needs friends”, with friends like Grant Robertson who needs enemies.

“Labour will blame the cyclone, they’ll blame COVID-19, they’ll blame the Russians. They’ll blame everyone but themselves. The truth is that less than $1 billion of their $7 billion blowout is for cyclone recovery. Oil prices are lower than before the war. COVID-19 is officially over. The common denominator in big spending is Grant Robertson.

“Government spending next year will be 79 per cent higher – or $137 billion – than when Labour entered government. Blowing out spending will blowout inflation which will blowout household budgets. It’s as simple as that.

“We need to stop the borrowing to reduce inflation and interest rates, so we don’t end up with 10 per cent mortgage rates. For a family with a half million dollar mortgage, mortgage rates being 0.5 per cent higher for two years costs $5,000, or $50 per week.

“Our Alternative Budget, A Time For Truth, would cut $38 billion in spending over four years, without touching frontline services, and let people keep more of what they earn with a two-rate tax system – 17.5 and 28 per cent. If you’re a nurse on $70,000, our tax cuts let you keep $2,500 more a year.

“Our alternative budget attacks wasteful government spending by shrinking the bureaucracy. It reduces the number of public servants and removes whole departments that add no value for the public.

“We can’t afford to be staring down the barrel of 10 per cent mortgage rates. Only ACT has a fully costed alternative to Labour’s blowout budget that would stop inflation dead.”

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