Financial trust gives National edge

JOHN HARTEVELT

National's yawning lead in the polls is built on an even larger gap in confidence on handling the economy, new polling shows.

The Fairfax Media-Research International poll shows 49 per cent of voters think National has the best plan to fix the economy, well ahead of Labour on 17 per cent.

The news gets worse for Labour, with only 48 per cent of its supporters backing its plan to fix the economy. Among National voters, on the other hand, 81 per cent support their party's economic plan.

The importance of confidence in the parties' economic plans is underlined by further polling that shows the economy's overall state is considered the second most important issue for voters, with 85 per cent saying it is either important or very important to deciding their vote.

The focus on the economy has also been sharpened by the threat of a second global financial crisis, precipitated by a potential debt default by the United States Government.

Westpac chief economist Dominick Stephens said yesterday that a default in the US remained "extremely unlikely", but if it did happen it would spark a global financial panic that would have "very serious consequences for New Zealand". More likely, however, would be "serious fiscal retrenchment" in the US, which would cause lower growth, lower interest rates and lower inflation.

Finance Minister Bill English said it was likely a short-term solution would occur on the US' debt ceiling problem. "They're just going to push it and push it further down the road," he said.

A new US recession would probably have a negative impact on commodity prices which may be offset by a drop in the exchange rate. However, New Zealand was increasingly attractive to overseas investors for its relative stability.

"We look like a safe haven for money in the international markets that has to be put somewhere."

The polling showed the public had "a good grip" of the need to "get the basics right", he said. "People are in a mood where they understand the basics need to be done well."

Labour's main economic policy, announcement earlier this month, was hailed as a "game-changer" by leader Phil Goff. But the poll suggests voters count capital gains and income taxes well behind other issues in importance.

The sale of state-owned assets – another campaign issue for Labour – was also down the list of issues, with 59 per cent counting it as either important or very important. The cost of living, which Labour has also emphasised as an issue, was a big concern, ranking fourth out of a list of 12, with 83 per cent saying it was important or very important.

The cost of living was of greatest concern to those describing themselves as financially "struggling" or "getting by", with 93 per cent and 84 per cent of those groups raising it as a top issue.

Massey University vice-chancellor and former Labour Cabinet minister Steve Maharey said both parties needed to come up with a longer term economic plan.

"All the sacrifices you make on KiwiSaver and introducing new tax revenue and so on, has got to go into things that genuinely lift our income.

"The kind of thing you're mapping out for people is how you're going to get rich – this is how we're going to actually make it."

The nation overall was "very bogged down" by global economic woes, he said. "All of that is absolutely right – if we don't cut our cloth then we won't be in the ball-game at all. But I think the next step is to say that what we're doing is positioning ourselves so we can invest in the things that will take us forward."

The Fairfax Media-Research International poll was done by a random selection of phone numbers nationwide, surveying a sample of both rural and metropolitan areas. It has a margin of error of 3.1 percentage points.

ECONOMIC POLICIES OF TWO MAIN PARTIES

Labour

Capital gains tax on shares, businesses and investment properties but not the family home.

Raising the top tax rate to 39 per cent on income over $150,000.

GST off fresh fruit and vegetables.

First $5000 of income tax free.

Changing the Reserve Bank's sole focus on interest rates as a monetary policy lever.

Tighter controls on foreign investment in New Zealand land and infrastructure.

More money for apprenticeships and skills training.

Introduce a $15 minimum wage.

Big investment in research and development.

Return the government's books to surplus by 2014-15.

National

Cut income tax and raised GST to shift the weight of taxation towards consumption and away from earnings.

Cut business taxes to 28 per cent.

Return the Government's books to surplus by 2014-15.

Partial sale of the four state-owned energy firms to help pay down debt.

Cuts to KiwiSaver, Working for Families and the public service to help balance the books.

Reform the Resource Management Act.

Boost to infrastructure spending including rollout of ultra-fast broadband.

Open 12 new trades academies.

Cut red tape to reduce business costs.

90-day trial for new workers.

National standards in literacy and numeracy.

- © Fairfax NZ News