KEY POINTS:
Labour is designing a potentially large spending plan to stimulate the economy - but will not say before the election how much it might spend or how much it might add to Government debt.
The move is part of Labour's bid to seize the economic initiative in the election campaign with policies addressing the global financial crisis and its fallout.
But as Labour talks of a mini-Budget in December and the bringing forward of infrastructure spending if it wins the election, it is not telling voters the financial implications of its short-term measures.
"We want to do further work on that in the immediate post-election period when we will have a better picture around what is happening to economic forecasts in the light of the financial turmoil," Finance Minister Michael Cullen said yesterday.
"This is almost a day-by-day situation at this stage, it's very hard to lock in anything."
Labour's plan, which was partly announced last Sunday, includes bringing forward infrastructure spending, changes to provisional tax for businesses, and discussions with the New Zealand Superannuation Fund to get more of its money invested at home.
Infrastructure work includes regional sewerage projects, school upgrades, state house upgrades, and rail and roading projects.
Dr Cullen said work had started on an "economic stimulus package" to help create jobs if the economy got into trouble.
The push would be financed by taking on more government debt earlier, which would push total debt above the already rising levels seen in the opening of the Government's books just over a week ago.
"Clearly the Government would need to borrow more at that point," Dr Cullen said.
That would also increase debt servicing costs for the Government.
"But it's important to keep the economy moving, because if you don't that decline in the economy will also be reflected in the Government accounts sooner or later," Dr Cullen said.
Asked how much debt he would be prepared to tolerate in the stimulus package, he was not forthcoming.
When a level of debt was put to him in a question, he said there was not much point in pushing him on numbers like that.
Labour has attacked National's plans to raise debt, and recently Prime Minister Helen Clark said it was "mind-boggling stupid" to go out and borrow when international markets were in crisis.
But the scale of the world situation has put a whole new complexion on the election campaign and Labour is changing tack as it looks for answers to the problem.
National's finance spokesman Bill English said Labour was overspending in the election campaign and its stimulus package would add more debt to that already in the Government's books.
National had factored extra infrastructure spending into its forecast debt track, which was similar to Labour's original one, he said.
"I don't think they're bothering to count, and they're hoping to deal with that by promising a mini-budget after the election," Mr English said.
"Imagine if we rolled up and said 'here's our plan, and after the election we'll work out if we can afford it'."
It has also emerged that the financial situation revealed when the Government's books were opened could become worse.
This is because forecasts assumed that the New Zealand Superannuation payment would be dropped from 66 per cent to 65 per cent of the average ordinary time weekly earnings.
The 66 per cent figure was a deal between Labour and New Zealand First that was supposed to expire.
If Labour kept it at 66 per cent an approximate calculation by the New Zealand Institute of Economic Research for the Herald estimates it would add an extra $54 million to spending in 2010/11, $117 million in 2011/12, and $126 million in 2012/13.
These figures are similar to those National has factored into its own economic package, which promises to keep super payments at 66 per cent.
