Labour ready to rethink policies

BY VERNON SMALL
Last updated 05:00 06/05/2010
Phil Goff
Sunday Star-Times
STAKING A CLAIM: Labour leader Phil Goff is to outline policy change in a speech in Nelson, to stake out his party's position before the Budget.

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The Labour Party is opening the door to policy change, including taking GST off food and clamping down on foreigners buying farms.

Leader Phil Goff will outline parts of the policy review in a speech in Nelson next week, aimed at staking out the party's position before the May 20 Budget.

Finance Minister Bill English has signalled a rise to 15 per cent in GST as part of a "tax switch" that will see income taxes fall.

Labour has campaigned strongly against a GST rise, which would put $2 billion a year into the Government's coffers, but has stopped short of promising to reverse it.

An exemption on food – or other changes to the goods hit by the consumption tax – would justify Labour's strident opposition and could mesh with the Maori Party's similar policy on the issue.

Labour has in the past strongly opposed exemptions for food, and Mr Goff said he still favoured a comprehensive low rate of GST.

However, as the rate increased to 15 per cent and possibly higher, it would hit low and middle-income people harder, so arguments for exemptions would grow stronger.

National has also indicated it will cut the top personal tax rate of 38 per cent – probably to match the top trust rate of 33 per cent. Mr Goff said yesterday that Labour would probably reinstate the 38 per cent rate but at a higher threshold than the current $70,000 – "$100,000 is a nice round figure".

There are about 118,000 taxpayers on more than $100,000 a year, representing 3 per cent of all taxpayers.

Mr Goff also signalled a rethink of the party's policy on foreign investment, especially as it applied to farmland. He said direct investment was welcome, but not foreign control of strategic investments that could charge "monopoly rents".

Labour would not take "extremist positions" but was looking at options to limit control. He pointed to existing restrictions on ownership of fish quota as one example where it had worked. One big concern was the possibility of dairy co-operative Fonterra eventually being foreign-controlled if enough dairy farms were bought by overseas interests.

Labour foreign investment spokesman David Parker said overseas ownership of farmland had always been controversial, but it needed extra scrutiny now.

"Land ownership is also the source of control of our major farming co-ops," he said. "China has a clear global resources acquisition strategy. It is widely reported as systematically acquiring control of primary resources – especially minerals, but also land in Africa."

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Chinese buyers have expressed interest in the receivership sale of 16 Crafar-owned farms, reputed to be worth about $100 million.

Finance spokesman David Cunliffe said the party was also looking at ways to encourage savings, such as new investment avenues, including government or infrastructure bonds. Frontbench MP Trevor Mallard's promotion of compulsory savings was at this stage his personal view.

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