John Armstrong: Lifting the economy Labour's new focus

Labour Party leader Phil Goff. Photo / Sarah Ivey

Labour has taken a fair bit of stick in recent weeks - much of it justified - for seemingly being consumed with relative trivia in its never-ending quest to tarnish and diminish John Key's stature as a veritable vote-winning tour de force.

Labour's intention in highlighting such things as the cost of the Prime Minister's security detail was to provide symbols of how National's Cabinet ministers have been spending (and wasting) public money on themselves in tough times.

However, this ended up looking like a "hit Key with all we've got no matter what" campaign. It did not work. If anything, it harmed Labour by making the party look desperate and bankrupt of ideas and policies to enable it to engage in meaningful debate.

Tomorrow's Budget will see a shift in Labour's election strategy. A shift is essential, as the election will be fought almost exclusively on who is not only best capable of running the economy, but who can get it running in a much higher gear.

The tactical rethink should appease critics who argue Labour is failing to talk about the "real issues" or focus on the "big picture".

The new approach has David Cunliffe, Labour's finance spokesman, talking not only of the Budget failing the critical test of fairness, but also of probably being insufficient when it comes to lifting economic growth rates.

Normally, Labour would place an overwhelming emphasis on fairness. The party's response to this year's Budget will certainly canvass that matter as it affects groups and individuals detrimentally. However this year, Labour will give a lot more stress on whether the Budget measures are sufficient to lift New Zealand's economic game.

Like National, Labour detects voters' new mood of gritty realism about the country's predicament.

Labour cannot ignore this mood. It has determined it will make that mood work for it by promising to be bold and decisive, whereas, it says, Key and Bill English have shown they lack the courage to make the big economic calls.

National is already under pressure on its right flank to come up with policies to spur economic growth. Labour intends applying similar pressure on National's other flank.

Before putting the squeeze on Key, Labour must deal with its traditional vulnerability - the myth that Labour finance ministers are never as prudent in managing the Government's finances as National ones.

Cunliffe and Phil Goff are tackling that myth by citing last year's tax cuts as irresponsible given the blow-out in the deficit.

They are seeking to underline their own fiscal rectitude by not blindly rejecting every cut to departmental budgets and programmes in tomorrow's Budget.

The pair will then brand the Budget as failing to make the hard decisions for hard times.

Just how bold Labour would be in Government will not be clear for some weeks. Don't expect new and detailed policy to emerge at the Labour Party's election-year congress in Wellington this weekend.

The party will produce a fully costed set of campaign pledges. It cannot do so until it has worked its way through the Budget forecasts to judge what is affordable. Labour cannot promise things it cannot deliver.

Cunliffe, however, insists he and his colleagues are confident they have things to announce which will surprise - even shock - and which will change voters' perceptions of Labour.

In the interim, Labour's message regarding this Budget will be short and sharp: It will hurt, but it won't help.