Labour resists National's trap

00:42, May 10 2012

The economy is not so flash. The Budget deficit is growing by the month. Unemployment is up, and consumer spending is looking soggy.

The John Banks furore and SkyCity pokies deal are leaving a nasty smell in the political air. Yes, the Government is facing some persistent head winds and has made its share of mistakes lately.

But investing $1m to bait a trap for Labour over contraceptives for beneficiaries surely wasn't one of them.

In the end it was a small part of a much larger welfare reform package, and in fiscal terms it will make very little difference in the long run.

But it was bound to draw the most public comment and tweak liberal sensitivities, especially the judgement call inherent in extending the contraception funding to the teenage children of beneficiaries.

The Greens were in boots-and-all to criticise the policy. And former MP Sue Bradford even obliged National by evoking the spectre of a long journey towards state-backed pressure for sterilisation and even eugenics.

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But Social Development Minister Paula Bennett had a ready-made defence; offering financial assistance to give beneficiaries more choice and control over their lives is hardly the stuff of radical Right politics. Conservatives leader Colin Craig suitably obliged on the opposite side of the political divide, rushing to attack the policy as - and I paraphase here - an intergenerational subsidy on promiscuity.

It is the second time in as many weeks - the first being the proposed law change to clamp down on boat people - where National has used "wedge" issues to not only deflect public attention away from its other woes but also to dig a politically correct man trap for Labour to wander into. For the Greens there is no harm in wrestling with the Government on these issues - it plays to their narrower constituency on the Left. But on both issues public opinion - and more importantly central swing-voter opinion - is firmly on the Government's side.

Labour welfare spokeswoman Jacinda Ardern has so far not taken the hook, dangled by the newly hitched Mrs Bennett, instead focusing on extending assistance to all women.

Wisely, David Shearer did not bite over immigration law either.

True, Labour is making little headway in political polls, even as the anecdotal evidence suggests the electorate is becoming more jaundiced about Mr Key. But it is showing more discipline over social policy baiting, and is also back on track with plans to axe some planks from its 2011 platform.

In his third "vision" speech last week, Mr Shearer put another expensive promise to the sword, saying he would not resume payments to the "Cullen" superannuation fund until they were affordable.

Of course, by 2014/15 National may well have the accounts back in surplus, so an incoming Labour Government would need to further define what affordable means; not, it seems, a bare surplus.

(Labour's latest finesse is to paint National's 2014/15 surplus as a mere detail; a target any party worth its salt could have hit; as it moves to define success in terms of policies for growth, not balanced Budgets.)

But take out of the mix payments to the Cullen fund and the $1 billion cost of a $5000 tax-free band, and Labour's alternative Budget is looking far healthier than the one it campaigned on six months ago.

Mr Shearer's broader aim is to set a stable fiscal base for Labour's election year promises. He is also pitching Labour as the party of "bold ideas" - even unpopular ones - through its advocacy of a capital gains tax and the need to lift the state pension age to 67.

National has shied away from both. But the combination of extra revenue, from a CGT, and lower spending will make it much easier for Labour to balance the books longer term.

If Mr Shearer's latest speech put some stakes in the ground, there were still some familiar problems. The subsequent press conference got bogged down clarifying his pension policy. And despite his use of autocues, even at relatively low-key venues, his delivery still lacks fluency.

It may not be pretty. It may, at times, be principle-lite; witness the sudden U-turn on contributions to the Cullen fund. But Labour is making steady progress towards a frugal - and un-PC - policy mix Mr Shearer believes is crucial if he is to have any chance of swaying his way a debt-averse, borrowing-shy electorate.

The Dominion Post