More to come in election year

There can be no doubt the election race is truly under way. After Prime Minister John Key kicked off election year last week with a policy announcement on education designed to broadly appeal, Labour leader David Cunliffe yesterday made his pitch for voter support with a range of policies similarly focused on children. In a speech billed as a state of the nation address, Cunliffe announced a new payment of $60 a week for new-born babies, paid parental leave for 26 weeks, more ante-natal care for expectant women and expanded access to early childhood education.

It is a package that will appeal primarily to young people beginning their families. What tangible effect it will have on the lives of most New Zealanders, even many of those who will be eligible for it, remains to be seen. Voters will be looking to hear much more from both major parties on their broader plans before election day.

The new baby bonus, would, according to Labour's figures, be available to 59,000 new-borns, giving them $60 a week for their first year. The idea is not a new one and is by no means exclusively a Labour one. The Australian Government under Liberal prime minister John Howard introduced a A$5000 bonus in 2002, although the latest Liberal Government has just decided to cut it to A$1000. Perhaps the most striking thing about Cunliffe's proposal is the high upper income limit to qualify for it. While Cunliffe spoke of wanting to help the poorest and most needy in society, the bonus would be available to families on a combined income up to $150,000. As has been quickly pointed out, a backbench MP and many other relatively well-heeled folk would be eligible. As a means of alleviating poverty, that seems generous. While $60 a week would make a difference to those on the lowest incomes, in practical terms it is only pocket money to families whose income is $3000 a week.

As striking as the baby bonus announcement was, the more interesting part of Cunliffe's speech perhaps lay in what he left out or only hinted at. He spoke, for instance, of tax credits for research and development without elaborating on the idea. He reiterated his commitment to a capital gains tax, claiming it would encourage investment away from property speculation and into productive businesses, but he did not explain how that happy outcome might be achieved. He spoke too of assistance to primary industry so that more is done here to add value, but again without elaborating on it or explaining how the many thorns in any kind of incentive scheme would be avoided.

He repeated his promise to raise taxes "on the wealthiest few" of income earners to pay for his promises. Since Labour's idea of wealth presumably begins on a family income somewhere above $150,000, voters will be keenly interested to see what that promise means in practice.

Cunliffe's announcements yesterday, like those last week of National and the Greens over the weekend, are clearly only the opening shots in what is going to be an interesting election season.

The Press