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Tuesday, August 5, 2008

Editoral: Debt now key election issue

^ fair enough.   The main argument against borrowing is the cost of the interest, while the argument for borrowing is the potential for the new asset to generate income.  For example; A business may go into debt to pay for an extension to their shop with the idea the extra floor space will generate more profits which will ultimately benefit the business.

Each argument is just as valid so there is no right or wrong.  National is for borrowing while Labour claims to be against borrowing. 

If Labour want to make this an election issue, they're going to have to be far more convincing.  To make their case they should declare an aim to reduce debt to 15% of GDP, necessitating the need to keep taxes high.  Their key messages would be the savings resulting from the reduction in interest payments and the fact more money stays in NZ.

 As Labour stands at the moment with a plan to cut taxes by $10.5 billion and keep debt at around 20% of GDP - they don't have the platform to mount such a campaign without being called hypocrites. 

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