'Have-nots' central to Labour's policies

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Last updated 05:00 27/01/2014
David Cunliffe
DANIEL TOBIN/ Fairfax NZ
LABOUR LEADER:David Cunliffe.

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Labour leader David Cunliffe will promise to help low-income families and pledge extra cash for early childhood education today as he tries to seize the political initiative from the Government.

His state of the nation speech, in the new West Auckland seat of Kelston, will heavily stress Labour's commitment to a more equal society.

It was a theme Prime Minister John Key also highlighted in his opening salvo of the political year last week, with a promise to raise the pay of more than 6000 teachers by more than $10,000 each a year and appoint "super-principals" to lift under-achieving schools' performance.

The move by Key, who emphasised the role of education in creating equal opportunities, was seen as a bold move into Labour's heartland and was welcomed by many in the teaching profession.

Cunliffe last week formally ditched two of his party's 2011 policies: a tax-free band on the first $5000 of income, and a pledge to exempt fresh fruit and vegetables from GST.

Together they would have cost $1.5 billion a year, and scrapping them has created room for Labour to spend in other areas to help low-income families.

Cunliffe said new policies would be better targeted than the two dumped tax breaks, which gave the same, or even more, to the rich as to the poor.

He would not say whether the new initiatives would use all the $1.5b saved.

Speculation has centred on a new payment to low-income families, likely to be targeted at those with children, but Labour MPs have refused to confirm this.

Finance spokesman David Parker would say only that the axed policies had created "fiscal headroom".

Labour's message that the Government is overseeing a tale of two countries - the haves and the have-nots - is aimed at countering the better economic news emerging, including forecasts New Zealand's growth rate will make it the "rock star" among developed economies this year.

As well as attacks on the unequal distribution of the benefits of recovery, Cunliffe is expected to warn of the damage rising interest rates will do to those struggling to get ahead and pay for the increasing cost of housing.

He is also likely to renew a call for fundamental reforms to macro-economic policy that National shies away from.

They include a capital gains tax (exempting the family home), changes to the way the Reserve Bank operates monetary policy and steps to gradually increase the state pension age from 65 to 67.

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