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May 30, 2011 | by  | in Opinion |
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Politics With Paul – Labour’s Eye For Detail

Despite a lackluster budget, it appears to still be the Labour Party copping it from the various political commentators.

There was plenty of ammunition in the Budget, that perhaps should be referred to as ‘bland’, as opposed to its adopted descriptor, ‘zero’. However, Key’s competence for parliamentary theatrics took the wind out of Labour’s sail who were left simply brandishing and awkwardly pointing at the document, completely drowned out by the roar across the House.

Goff did do significantly better at Labour’s annual congress, finally revealing that perhaps Labour has a little more guts than it has exhibited in the past two-and-a-half years. But again, the fact that the media have been left with more questions than answers about Labour’s proposals have meant that the Goff ’s congress glory has been once again, quickly stripped back.

Labour face a huge challenge leading into this election, constrained by what the New Zealand Herald’s John Armstrong has aptly named, “a fiscal straightjacket.” For the party generally associated with habitual spending, Goff is in a positionwhere he needs constantly reiterate that a Labour Government will not push the country further into debt. Fiscal neutrality was thus central to the big policy announcements of the congress.

First and foremost, Goff has announced Labour intend to reintroduce the tax credit for research and development (R&D) spending, that National scrapped after gaining power in 2008. It is slightly less, than the Clark Government’s 15% tax credit, at 12.5%—a sign of the times— but has been roundly welcomed by the business community as more beneficial than the scheme currently in place under National.

The tax credit doesn’t come cheap though, and the farming community will have to pick up the $800 million price tag. Perfectly timed with the criticism directed at farmers for being evasive on tax, Goff has announced that Labour will introduce the Emissions Trading Scheme (ETS) on the agricultural sector from 2013, two years earlier than planned, which he says will ensure farmers are paying their “fair share”.

To be sure, as traditionally National voters, farmers are an easy target. This will certainly be one of the easier trade-offs Goff will advocate this year. But, it is a sound plan, and reflects a longer-term perspective on developing growth than can be found Bill English’s latest Budget. Moreover, Goff has managed to cleverly play the environmental card simultaneously.

Key still got his sound bite though, claiming that Labour’s plan would see increases in the price of the “staples of the New Zealand diet”. Goff has made good strides at refuting this, backed by advice from Fonterra Chief Executive Andrew Ferrier, who assures that international markets set prices for dairy. However, as Andrea Vance argues, the policy is far from clear at this point. “Will the tax credits extend to foreign companies? How is Labour planning to cap them? What will the carbon price be for the ETS proposals?”

Also killing two birds was Annette King’s proposal of a Children’s Ministry at a cost of $4.5 million, to be paid for by scrapping (Labour’s) Families Commission saving $7 million. King has not only jumped headfirst into the debate around NZ’s distressing child health and safety record, but has simultaneously freed up cash for other areas of spending. Of course, whether what children need is more bureaucracy is another question entirely.

Goff ’s other big policy announcement at the congress was the introduction of a $15 minimum wage. Of course, an increase in the minimum wage hits employers rather than the Government, so is an easy promise for Goff. However, as Key was quick to point out, it creates the potential for job losses, which the Department of Labour predicts could be approximately 6000 at a $15 minimum wage. Whether this is true is debatable, and certainly it’s a solid line for Labour to follow in an election that should be fought on the cost of living.

Labour isn’t expected to release it’s full fiscal framework for at least a month yet, and only time will tell whether their alternatives are truly viable. More will have to be done around comprehensive details however, if the opposition really want to get some momentum behind them.

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