David Cunliffe wants to bring jobs back to Wanganui and help build local industry.

The Labour leader was in town yesterday launching Hamish McDouall's campaign for the Whanganui electorate seat.

Mr McDouall shaved 1500 votes off National's incumbent Chester Borrows last time, so he still has a daunting 5000 votes to catch up, but Mr Cunliffe backed his candidate's chances.

"He is an experienced candidate with a well-known place in the community and, secondly, as deputy mayor his profile's gone up," Mr Cunliffe said.

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"Labour's party vote is climbing relative to last election and that gives him a better springboard."

Mr Cunliffe spent an hour walking down Victoria Ave with Mr McDouall and Te Tai Hauauru candidate Adrian Rurawhe at lunchtime. He said the main issue people talked about was the need for jobs.

"Wanganui is a common picture in the sense that it's a lovely regional centre but it's being held back by the lack of regional development," he told the Wanganui Chronicle.

The town has lost more than 50 Government jobs in the past four years and he would endeavour to bring them back, he said.

"Absolutely, if you get your regional footprint up it's a win-win because it breathes life back into the towns.

"That is all fixable if the Government committed to keeping jobs in the regions."

Mr Cunliffe said there was a lot a government could do to increase jobs in the regions.

"The Government have a part to play in making sure that the infrastructure is present to help industry move forward."

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Labour's tax policy would be aimed at helping industry add value to raw materials, creating jobs and income.

Several foreign companies operated in New Zealand taking raw materials and adding value to it overseas and he wondered why New Zealand companies weren't getting in on it.

A capital gains tax coupled with a research and development tax break would help that, he said.

"At the moment it rewards land banking and it disincentivises production."

He said the Auckland housing issues and regional development could be helped by encouraging migrants to regional areas such as Wanganui.

"The possibility that we want to look at, we haven't announced yet, but we'll consider a bonus points under the points system for migrants who are willing to settle in regional centres. That's not forced, it's not compulsory but it gives people an incentive."

Labour are still lagging in the polls but Mr Cunliffe said a victory come election day wasn't out of its reach.

"You've got to take a view from election day looking backwards. It's an election that's very finely balanced from a left, right perspective ... there's only a couple of per cent in it most of the time."

He would not be drawn on coalition partners but said the Greens and New Zealand First would be considered. "The public will have their say and say who goes to Parliament and then we'll put a coalition together."

He wouldn't rule out Internet-Mana either.

"(It) probably wouldn't be the first preference, but we'll see," he said.

"You don't know how the world's going to look, so you can't go ruling out."

Housing, jobs and a growing sense of inequality in New Zealand would be the election battleground, he said.

He also didn't want to get caught up in personality politics.

"I don't want to play the game where it's about style over substance, I think it's about the truth well told."

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