KEY POINTS:
Seldom has an election campaign started under clouds as ominous as those now overshadowing the global and national economies. Helen Clark and John Key launched their parties' campaigns yesterday with international finance markets frozen and the possibility a credit crisis could hit business and jobs in this country before election day.
The Prime Minister announced the Government would guarantee bank deposits, as Australia has done recently. Neither country's banking system appears shaken by the upheaval in the United States and Europe, but the deposit guarantee should allay any danger of a run on small savings that would add to difficulties the banks are likely to face from abroad.
National leader John Key offered no specific policies to meet the financial crisis. He told his party's rally National was in close contact with the Reserve Bank and he was satisfied its current plans were sufficient to maintain confidence in the financial system over coming months.
Amid the international upheaval the country has learned its own economy has been carrying a level of public spending it cannot sustain if taxation is going to be reduced, as both parties have promised. Under Labour's programme, announced in the May Budget and unchanged when it released the pre-election fiscal update last week, the public accounts will be in deficit for a decade. National's plans, hurriedly revised in the light of the update, would run a deficit for just one year less.
Both major party leaders indicated at their rallies yesterday that the recession worries them more than a decade, or near, of deficits. Labour announced a package of economic stimulants, mainly bringing forward capital works on roads, railways, schools and local authority projects, that it says will be implemented if the economy deteriorates further.
National's stimulus rests on its first round of tax cuts promised for April. Though Mr Key criticised the deficit Dr Cullen has produced, he said, "It would be absolutely wrong to tighten the screws on the economy at this point." Along with tax cuts he talked of the need to lift the country's productivity, which National would start by reducing costs in the public sector and pushing its resources into "front line services".
National, too, would spend more on "infrastructure" (unspecified), improve school standards, train more health professionals and encourage them to stay. Mr Key's speech was more detailed about what National would not do. It would not sell assets. It would make no change to the welfare schemes, Working for Families and 20-hours free early childhood education, that weigh heavily in the Budget blow-out. Nor would National check primary healthcare subsidies and interest-free student loans.
Helen Clark's next plans were more specific. Given a fourth term, Labour would refine its extension to compulsory schooling, making apprenticeships available in secondary schools before the leaving age is raised to 17 in 2011 and 18 in 2014. She hinted that tertiary fees and allowances might be restored to levels of generosity enjoyed by her generation.
And climate change would feature heavily - with biofuels, energy conservation and the emissions trading scheme - in a Labour future.
Her speech, like Mr Key's, made frequent references to "challenging times", but there remains an air of unreality about the impact of distant events. The leaders are giving the risks a passing nod, no more. They are pressing on with tax reduction and spending plans in the hope that normal politics need not be interrupted. Both may need to be more nimble in the weeks ahead.
