PM blames papers for tax hype

Helen Clark is defending the Government against criticism that its Budget was a public relations mistake.

But the Herald understands there is privately disquiet within Labour's ranks about the handling of the event, with some insiders conceding it should have been done differently.

They now believe Finance Minister Michael Cullen should have moved to announce details of the tax threshold changes, or to downplay the nature of them, once speculation began to mount several days beforehand.

Dr Cullen opted against damping it down, resulting in disappointment over the small and distant nature of the changes overshadowing other Budget spending, including his prized workplace savings scheme.

A snap Herald-DigiPoll survey published yesterday showed most voters - 53.7 per cent - were not satisfied with the tax cuts, compared with 27 per cent who were.

The majority also said they were unhappy with the three-year wait for the threshold change - worth between less than $1 to a maximum of $10 a week - to kick in.

National has seized on the issue to highlight its more significant tax cut plans.

Both the Prime Minister and Dr Cullen have laid the blame for at least some of the negative reaction to the Budget on newspapers.

Despite the contrary behind-doors murmuring, Helen Clark continued the offensive yesterday, saying she found the "focus of front pages of print media in particular really quite odd on the whole matter".

She said Labour Party president Mike Williams claimed he had been misquoted by the Herald when it reported him saying, "There's something in the Budget that is referred to as the deep, dark secret".

The quote angered the Government as it fostered the impression that Labour was complicit in the build-up of speculation about the tax threshold issue.

Helen Clark's disclosure of Mr Williams' attempt to distance himself from the quote further hints at the tension behind closed doors.

Questioned by the Herald about comments Mr Williams had made on another matter yesterday, Helen Clark said: "As he's told me that the words 'deep dark secret' were put to him by you and then attributed to him, I'm not going to take for granted what [you say] he may have said."

In the taped interview on the threshold issue, Mr Williams told the Herald: "I haven't heard any discussion about it at all. I mean there is some deep, dark secret in the Budget which keeps getting referred to as the deep, dark secret. Whether that's it I just don't know."

The tape confirms the Herald reporter never used the phrase.

Helen Clark said yesterday that she found it hard to understand the sudden criticism of her party's well-known view on tax cuts.

"If Labour has lost its touch I assume the same people would have written the same columns in 1999 when we campaigned on a tax increase and the National Party had passed legislation not only cutting tax but cutting superannuation to finance it as well.

"Again last election the National Party promised tax cuts. The Labour Party didn't.

"This time the Labour Party offers business a quarter of a billion dollars in year one in tax breaks and signals a very important change to the indexation of thresholds out to the future ... and we're told we've lost our touch. I really find this a bit curious."

Working for Families would put $100 a week into the pockets of low- and middle-income families.

Helen Clark said tax cuts "do very little for low-income people".