Key hints at bigger tax cuts sooner

National leader John Key is hinting his party will bring in tax cuts sooner than Labour's second round in 2010 - and that they will be bigger.

He also signalled National is looking at singling out higher earners in an attempt to increase incentives to work harder and longer and for skilled people to stay in New Zealand. "I think putting the right incentives in the economy is very important. We need to ensure people get to keep more of their money but it is also [about] ensuring people see the benefits of taking a bigger job, working harder, working longer hours - whatever it might be - but certainly advancing themselves."

He did not see tax cuts as a game or a bidding war. "Is the election just about National giving people a bit more in tax cuts? I don't think so."

Speaking after addressing a trans-Tasman business meeting in Auckland, he said tax cuts remained National's priority, but he refused to give details. As in 2005, they would probably be made public in the first week of the election campaign, some four to five months away.

"I'm not ruling out that we might bring tax cuts forward earlier," he said after telling the 350-seat lunch meeting that the timing, design and structure of National's plan would differ from Finance Minister Michael Cullen's $10.6 billion package announced in the Budget.

Asked how he would pay for them, he said: "We are confident there is waste in the system that can be cut, that we can structure things in a different way. It's about priorities."

But he said Dr Cullen was broadly correct to say the surplus - forecast to fall to near zero with cash deficits of about $3.5 billion a year - was right at the edge of the comfort zone.