Goff pledges new controls for economy

Last updated 05:00 13/05/2010

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Labour leader Phil Goff has reached out to homeowners and exporters ahead of next week's Budget, promising to end the focus on lifting interest rates to fight inflation.

Mr Goff said yesterday that Labour would give the Reserve Bank new powers to regulate the economy, suggesting the present focus on inflation will be expanded to include the stability of the dollar, full employment and economic growth.

He confirmed Labour was also investigating whether GST should be removed from fresh fruit and vegetables if it rises as expected from 12.5 to 15 per cent in the Budget.

Labour would also restore government contributions to KiwiSaver to 4 per cent of earnings and was considering making the scheme compulsory.

In a speech in Nelson, Mr Goff tried to turn the tables on National, saying it promised tax cuts in opposition but had introduced several new taxes in government.

These included plans to increase GST and property taxes in the Budget, last year's hikes in ACC levies and the $50-a-year fee on student loans due next year.

He also included last month's rise in tobacco taxes, despite Labour supporting the move.

"There has never been an 18-month period in New Zealand history when a government has imposed so many new taxes on hard-working Kiwi families."

He said reforming monetary policy would be a cornerstone of Labour's economic platform at the next election, but the Reserve Bank would not get powers to increase GST and there would be no mortgage levy.

At present, the Reserve Bank must keep inflation between 1 and 3 per cent. The main control is lifting interest rates, which leads to higher mortgage costs and rises in the dollar as overseas investors chase higher returns in New Zealand.

Finance Minister Bill English said the speech did not contain any new policies. Measures such as restoring KiwiSaver and Super Fund contributions, and removing GST on fresh fruit and vegetables, would add $90 million a week to national debt.

"There is nothing new from Labour, just its same old twin pillars of more debt and higher taxes."

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