Labour churns out more election promises

Helen Clark's seventh campaign card pledge is expected to both reaffirm and boost KiwiSaver contributions. Picture / Mark Mitchell

Labour will pledge a boost in contributions to the new KiwiSaver scheme today, as the election turns into the starkest choice between big and small government since 1984.

National leader Don Brash will offer $3.9 billion in phased tax cuts tomorrow, with a "dramatic overhaul" of the 21c, 33c and top 39c personal rates.

"It is certainly one of the largest tax relief packages New Zealand has ever seen, and one designed to encourage initiative, encourage skill acquisition, encourage aspiration," he told the Herald on Sunday.

To help fund it, he will scrap Labour's promised workplace savings scheme, which his finance spokesman John Key described as "poorly designed and unfair".

But Prime Minister Helen Clark's seventh campaign card pledge, to be announced at Labour's campaign launch at Auckland Town Hall this afternoon, is expected to both reaffirm and boost KiwiSaver contributions.

The KiwiSaver scheme was intended as the centrepiece of this year's Budget.

It would begin on April 1, 2007, and would allow workers to put 4 per cent or 8 per cent of their gross salary into a savings fund which they could access at 65.

The Government would subsidise management fees and would allow first-home buyers to use the money towards a deposit.

It would also contribute $1000 a year, up to a maximum of $5000. Couples would, therefore, be entitled to as much as $10,000 if they both contributed.

The scheme is expected to attract more than 400,000 workers in its first three years, and the Government would give it a kick-start by contributing $1000 to every account.

Dr Brash, whose campaign launch goes head-to-head with Labour's this afternoon in Auckland, said yesterday the polls showed it was anyone's race.

"I think it's going to be very tough ... I can hardly wait."

His tax package would provide greater incentive to get ahead through "here and now immediate tax relief".

He said Labour's Working for Families tax rebates would help only 11 per cent of households.

"It dishes out quite a lot of money to a very small constituency - people who Labour might well regard as swinging voters, so it's hard to avoid the conclusion that it's pretty cynical."

Dr Brash also confirmed he would mount a renewed assault on special treatment for Maori, which catapulted him into the lead in the polls after his Orewa "one law" speech last year. "We want to work on the basis that all New Zealanders are equal before the law without special rights or privileges for people based on ethnicity."

But National is also facing problems with potential coalition partner United Future.

As well as aborting KiwiSaver, National is looking to help fund its tax cuts by reducing bureaucratic waste, incorporating Maori Television into TVNZ, and getting rid of economic development grants.

But provocatively, it hopes to abolish the fledgling Families Commission - created at the behest of United Future.

Yesterday, United leader Peter Dunne told his campaign launch in Epsom that maintaining the Families Commission would be a bottom line in any coalition negotiations.

He would not accept any downgrading of its status: "If that's their objective, then they won't have our support - it's as simple as that," he said afterwards.

The other two bottom lines would be stopping cannabis decriminalisation, and stopping hate speech laws, which United believes would impinge on freedom of speech.

- HERALD ON SUNDAY