John Armstrong: It's game on for Labour

Labour leader David Shearer. Photo / Paul Estcourt

David Shearer's first big speech as Labour leader does the trick. It does what was expected of it. It contains enough hints of the direction he will be taking the party - and that direction is firmly towards the centre.

That might not seem to be the case at first glance. Shearer's flagging of the retention of capital gains tax as Labour policy will grab the headlines. It is a policy associated with the left. Wrongly as it happens. Such a tax operates in plenty of countries with Governments from the right. Shearer wants to keep it for the reasons those countries do so: first, to switch investment from non-productive assets, such as housing, to productive sectors, and second, to cut personal taxes down the track.

It is a hugely significant move. And a very brave one. It might yet cost him the next election. But, unlike Phil Goff, Shearer at least has time to sell the tax.

Of equal note is the dropping of Goff's tax-free zone for the first $5000 of income - a tax switch which was supposed to help the poor but which also gives the same tax cut to everyone else.

Also for the chop - although Shearer refuses to confirm it yet - is Labour's plan to remove GST from fresh fruit and vegetables.

These policies, while worthy, are now seen as having cost Labour votes because they made the party look fiscally loose.

Under Shearer's charge, Labour is instead going to be "thrifty''. And he means it.

Many will find the rest of the speech somewhat tentative. But Shearer first has to carry his party with him.

The speech is daring enough as it is. Take education. When was the last time a Labour leader talked of the country not being able to afford having "bad teachers in our classrooms'' while saying he is putting "badly run schools on notice''?

It is the Labour equivalent of swearing in church. He refused to be drawn on whether he was hinting at performance pay for teachers, but the speech comes pretty close to saying that needs to be considered.

There is also a hint of a tougher stance on welfare reform. The speech talks of rights and responsibilities and giving a "nudge'' behind those getting benefits who are not meeting their side of the contract in terms of work-readiness.

It is a fair guess that other words may have been in mind before Shearer settled on the more gentle "nudge''.

He will not be heard saying the speech is a pitch for the centre. He will simply say it is a matter of choosing policies that work and discarding those which do not.

But it is in the centre where the bulk of Labour' s lost vote resides. Those voters may not like the retention of a capital gains tax. They will probably fail to pick up on the hints that Labour is going to be vastly different from last year's incarnation.

Today's speech will be fleshed out in more detail in ones to follow in coming weeks, however.

A new leader has to start somewhere. Shearer delayed doing so until he felt that he had got things right. The wait was worth it. Today's speech is the perfect antidote to last year's electoral disaster. It marks a new beginning for Labour. It's game-on from here on.