Cullen outlines Labour's economic policy
Labour has outlined its economic stimulus package it would bring into force in December if re-elected on November 8.
Labour's finance spokesman Michael Cullen said the size of what would be done would depend on how badly the New Zealand economy was hit by the international credit freeze which is sending shock waves around the world.
Labour's economic policy released today had two strands -- a short term rescue package and longer term policies aimed at increasing productivity.
The December mini-budget would mainly consist of bringing forward planned building projects such as new schools, sewerage schemes and state housing improvements.
"We are not just going to sit on our hands and say what we put into the programme as of budget time, will necessarily prove adequate in relation to a more challenging economic environment," Dr Cullen said.
There would have to be new money raised from borrowing in the short term for such projects, he said.
Labour would also reduce the use of money interest rate for underpayments of provisional tax to the same level as that paid out by the IRD to taxpayers who overpay provisional tax.
This meant those who feared their profits would be reduced next year would have room to pay less tax without fear of being hit by Inland Revenue.
Dr Cullen said this was intended to give businesses a bit more cash in their pocket in times of uncertainty, though anyone who deliberately underpaid their tax would be hit with penalties.
The longer term policies were focused on investment in large projects and how they would be funded.
Labour would issue long term infrastructure bonds with a tax-free inflation indexed element with a 20 year life to fund large projects such as extending the electrified rail network into Auckland's North Shore and beyond.
Dr Cullen did not say so directly, but these bonds could be taken up by the New Zealand Superannuation Fund and KiwiSaver providers who he wanted to invest more in New Zealand.
"It is a question of how we can be sure that the developing assets we have in New Zealand... can also drive New Zealand's economy from within," Dr Cullen said.
"I am certainly not saying we want to direct those (funds), but (we will look at) what changes in policy would encourage those running KiwiSaver funds, the Guardians of New Zealand Superannuation Fund to say `lets up our allocation to the New Zealand market'."
Those funds would not be asked to change their focus on getting the best returns, he said.
Dr Cullen also said a Labour government would continue annual adjustments to the minimum wage in line with average wage increases or inflation, whichever was greater.
Some had suggested it should rise to $15 an hour, Dr Cullen said this was a good target, but he could not make a concrete commitment to that in the current economic climate.
Other points covered in the economic policy included:
* $500 million over five years to improve broadband;
* the use of private/public partnerships for large scale infrastructure projects;
* working with exporters to lift exports to 40 percent of GDP by 2020;
* co-ordination between fiscal and monetary policy to best protect the tradeable sector from volatile interest and exchange rates; and
* a deepening of venture capital markets.
National Party finance spokesman Bill English said Dr Cullen had released a largely cut and paste set of economic policies that repeats many of Labour's failed ideas and offered little hope for struggling Kiwis.
"Dr Cullen's thrown together a grab-bag of ideas that provides no numbers, no figures, and no projections for debt or the deficit," Mr English said.
"Labour is hiding its real intentions from the public by promising a mini-Budget after the election, where they will reveal what promises they plan to break."
National had already committed to increased spending of $300 million more on infrastructure next year, rising to $750 million over and above Labour's current spending by 2014/15.