John Armstrong: Take that, Cullen tells voters - and Brash

Gone by lunchtime - literally.

No sooner had Michael Cullen opened the Government's financial books yesterday morning and revealed that cash is flooding into Treasury coffers in ever greater quantities than he was saying he had already spent most of the windfall on a tax cut for the middle classes.

Planned in secret over the last four weeks to catch National off-guard, Labour's sudden extension of "family tax relief" into another 60,000 households in the middle-income bracket caught everyone by surprise.

It should not have. Labour's audacity is matched only by its ruthlessness.

Once the gasps greeting the tax take forecasts in the pre-election fiscal update had subsided, there were no prizes for guessing where the extra cash - some $1.6 billion over four years - would be directed.

Many voters in the electorally-sensitive middle-income bracket felt aggrieved at missing out on top-ups in last year's complicated Working for Families package - only to feel they missed out again when May's Budget failed to give them a tax cut.

They may feel their votes are being belatedly bought, but those families now have a choice, whereas previously they could only wait and see what National had to offer.

Yesterday's announcement was a pre-emptive strike against National in more ways than one, however.

It not only extends Labour's reach into the middle-income bracket and beyond, it gets the party into the tax debate on a more equal footing and, crucially, ahead of National's formal campaign launch on Sunday, and the release of that party's tax policy on Monday.

The Prime Minister now has something to throw back at Don Brash on National's key issue when the pair go head-to-head in a television debate on Monday night.

Labour is gambling National will have to spread the money it has set aside for its tax cuts so thinly, people will feel they are not going to get any significant benefit.

In contrast, its targeting approach means it can put much more cash in hand - $63 a week to a family on $65,000 with two young children - to a crucial group of voters at relatively little cost.

The policy is unlikely to deliver the kind of campaign king-hit the party's axing of student loan interest did. But Labour believes voters will not be able to pass up the substantial weekly entitlements, even if they recoil at the way the election is turning into the mother of all auctions.

There is a potential downside for Labour, however. Single people and childless couples may resent Labour's largess going just to working families with children.

Dr Cullen will now also find it nigh on impossible to convince people National's tax cuts are unaffordable. What's good for the Cullen goose ...