"The Government went to the country with a brave forecast of 3% economic growth. It revised it down to 2.5% and this week, New Zealand Institute of Economic Research (NZIER) said 1.8%."
The economy was at a critical position and after three and a-half years in power, it was too late for excuses from the Government, Mr Cunliffe said in an interview.
He warned that the Government needed to take action, but not the sort of action he believed Finance Minister Bill English was contemplating in his Budget 2012.
"The Government will be desperate to reach surplus by 2014-15 and will be contemplating savage expenditure cuts which will, in turn, hold the economy further back. We are in for a slow, hard grind and it doesn't have to be that way," he said.
Yesterday, Statistics New Zealand figures showed that retail card spending by New Zealanders grew modestly last month, but economists believe continuing high levels of household debt are constraining growth in retail spending.
Statistics New Zealand figures showed the value of total transactions fell a seasonally adjusted 0.2% to $5.42 billion in March.
That followed a fall of 0.3% in February.
Spending on core retail industries, which strips out motor-vehicle expenditure, rose 0.5% to $3.36 billion. This was boosted by rises in three of the four industry groups.
Spending in the hospitality industry showed the biggest gain, up $12 million, followed by consumables rising $8 million and apparel up $7 million.
The decrease was led by fuel, down $16 million on a month earlier, and non-retail, which fell $22 million.
Unadjusted spending in core retail rose 5.8% from March 2011.
ASB economist Daniel Smith said the March result was in line with expectations and demonstrated more or less what would be the trend rate of growth for the rest of the year. A modest rate of economic recovery and the still high level of household debt should see continued gradual growth in retail spending.
"While the household sector is recovering and private demand is growing slowly, we do not see this sector as a source of inflationary pressure in the near term. We continue to expect the OCR will be left on hold until the end of the year," he said.
Statistics New Zealand figures, also released yesterday, showed New Zealand's hotels and motels extended their run of falling guest nights after the number of foreign visitors fell in February.
Total guest nights fell 2% to 3.2 million in February from the same month a year earlier, Statistics New Zealand said.
The bulk of that decline came with an 11% slump in international visitors staying at local lodgings, to 1.4 million guest nights.
Mr Cunliffe said the Statistics New Zealand releases, on top of the NZIER release showed that the economy was still struggling to claw its way out of an extended rut.
