NZ heading in the wrong direction - Goff

Labour leader Phil Goff. Photo / Doug Sherring

Labour leader Phil Goff has launched a pre-emptive attack on the Government's budget next week accusing it of creating an unfair New Zealand which is increasingly lagging behind Australia, saying what direction a Government he led would take.

He said the Government planned a "tax switch" to benefit the rich, was failing to grow the economy and allowing the gap with Australia to widen.

In his pre-budget speech in Nelson today Mr Goff slammed National's direction and lampooned its pre-election promise of catching up with Australia.

"To the contrary, wages have risen faster in Australia over the last year. Our unemployment is higher than Australia's by a significant margin for the first time in a decade."

Mr Goff said while Australia was boosting employer contributions to superannuation the Government here had done the opposite.

Australia's top tax was higher than New Zealand and the reason kiwis were going to live there was wages which the Government had not managed to lift.

A GST increase, signalled by the Government to be as much as 15 per cent, would hit "hardworking" families already having to bear ACC increases, higher power bills, increasing mortgage rates.

Most of the population would pay more tax through GST and get some back in their salaries while top income earners rates would come down from 38 cents in the dollar to 33 cents.

"Labour will address the unfairness National is creating."

Mr Goff did not rule out reversing any GST increase but also floated redirecting the income to bigger tax cuts for middle and low income workers.

"That is what I am committed to."

He said Labour would raise the level from $70,000 for the top tax rate.

"What I can guarantee is Labour's package will be fairer than National's."

The party would also consider removing GST on fruit and vegetables worth about $200 million a year and said tobacco tax revenue increases could be used to pay for that.

Labour would focus on increasing savings, exports and foreign investment, change monetary policy and better support research and development and growing skills, he said.

Labour would require the Reserve Bank to pursue broader policy goals and give it wider tools.

KiwiSaver incentives would be increased and a universal programme would be considered.

Strategic assets would not be allowed to be sold overseas.

In research Labour would restore incentives to invest more and would put more into clean technology investment.

- NZPA