Brash to focus on welfare reforms

Welfare reform will be the topic for National Party leader Don Brash's state-of-the-nation speech in Orewa next week.

Dr Brash will contrast the apparent contradiction between businesses suffering labour shortages while more than 300,000 people are receiving income-tested benefits.

He will refine his party's plans for reducing the $5.7 billion welfare bill, by moves such as reintroducing work-testing and getting tougher on child-support defaulters.

But he is expected to avoid a repeat of the so-called "sugarbag" speech of two years ago, which suggested that jobless people turn up at the Post Office each morning for work, allowing opponents to paint Dr Brash as punishing beneficiaries.

Few are expecting anything like the seismic impact of last year's speech about special treatment for Maori and "a dangerous drift towards racial separatism".

The speech saw National surge in the polls, from 24.8 to 45.5 per cent (Herald-DigiPoll survey).

In response, Prime Minister Helen Clark ordered a review of all Maori-targeted policies, and appointed a co-ordinating Minister for Race Relations, Trevor Mallard.

National's lead on Labour was maintained until September.

Despite the lower expectation for next week's speech, the pressure is still on for Dr Brash to produce a recovery from National's 30.4 per cent polling last month - 20 points behind Labour - early in an election year.

Dr Brash decided on the subject last week, after commissioning work on two other possibilities - education and a morals-based speech.

Those two will be left closer to the election, which must be held by the end of September.

By allowing the subject of the address to be leaked, National is trying to manage expectations of the speech. But it gives the Government time to prepare a counter-strategy.

Anticipating that welfare was to be the focus, Social Development Minister Steve Maharey this week announced a $27 million package to try to get 7300 long-term unemployed back into work.

But making it harder for Dr Brash's attempt to set the political agenda is the fact that the unemployment rate of 3.8 per cent is the lowest in the 18 years the official rate has been recorded.