Key cautious on radical economic reform plan

Former National leader Don Brash headed the taskforce. File photo / Doug Sherring

Prime Minister John Key says radical changes proposed in a report into ways to increase New Zealand's productivity are unlikely to be implemented quickly, if at all.

The 2025 Taskforce - named for the date the Government aims to catch up with Australia - will today unveil its report.

Big cuts in top tax rates, cashing up the superannuation "Cullen Fund" to reduce government debt and a traffic congestion tax starting in Auckland are among the measures Don Brash's taskforce has suggested to close the pay gap with Australia by 2025.

Mr Key said during the 1980s and 1990s New Zealand underwent radical economic reform while Australia took a more incremental approach. The trans-Tasman neighbour was now in much better shape.

"In that regard I am not convinced that absolutely radical big bang reform is the right way to go," Mr Key told Radio New Zealand.

"It would certainly have a dramatic effect on New Zealanders and in the short term it would feel very much like we were pulling the rug out from underneath them."

Mr Key said the Government would also keep its promises.

"We campaigned on some core commitments, like not raising the age of super or putting the interest back on student loans, and we would be breaking those commitments if we went and did that so we are not going to.

"That doesn't mean the report doesn't have some value. There well may be some nuggets in the middle of the report... but we are not going to slash $8 billion worth of government expenditure to get the top personal rate down to 20 per cent because I just don't think that would be equitable or fair or something we could easily manage."

Mr Key said some ideas might have merit and he said the tax working group found favour in lower taxes although not on the scale of those recommended in the report.

Labour leader Phil Goff questioned the motivation behind the taskforce.

"It makes you wonder why you would set up a committee led by Don Brash who has come up with an entirely predictable and discredited agenda," he said on Radio New Zealand.

"Why would you do that other than maybe to frighten the hell out of people, put up a straw man and then say `look we're only going to go part way toward that agenda' and everybody breaths a sigh of relief because the slashing that occurs isn't quite as extreme as the Brash proposal."