Labour's fiscal package to 'benefit more middle and lower income families'

Labour won't go ahead with the tax threshold changes pledged by National. Photo / Mark Mitchell

More middle and lower income families will get an income boost under a fiscal package to be released by Labour today than under National's own spending plan, Labour says.

National delivered a $2 billion a year package of tax cuts of up to $20 a week in May's Budget, by shifting the two bottom thresholds from next April.

Labour delivers its election-year response today. It will not change tax thresholds and instead adopt what it says is a more targeted approach to deliver a boost in Working For Families and other support for middle and low income earners.

More money will also be pledged to education and health budgets.

Labour released part of the package last night - a new "winter energy payment" that would see people on superannuation or a main benefit get up to an extra $140 a month on top of their payments during winter.

The party says the "winter energy payment" will cost $374 million a year.

The payment would be $450 a year for a single person on a main benefit or superannuation, and $700 a year for a couple or a person with dependent children, paid in monthly payments from May to September.

The payment would not be limited to a specific type of expenditure - people would be able to spend it as they see fit. Labour says this could be on heating or investing in draught-stopping and insulation.

Eligible people will need to apply to Work and Income, and Labour has calculated the total cost on an expected take-up of 80 per cent.

Labour's finance spokesman Grant Robertson said there were many older Kiwis who simply did not heat their homes in winter because of a lack of money.

"We are really concerned that we have to provide some extra support for that very basic need, and that also applies to people on low incomes who are really struggling to do that."

Labour has already announced policy to fund 600,000 grants of up to $2000 per dwelling towards the cost of upgrading insulation and heating, saying this would be funded by closing a $150m-a-year speculators' tax loophole.

Robertson said the new winter energy payment was treating a symptom, not a cause. But he expected it to remain in place for the foreseeable future.

"Turning around the stock of housing in New Zealand is a long-term thing. Regardless of that, these are low-income, fixed-income people who particularly in winter face very high bills and we want to do something to help them."

Robertson said after the release of the wider package today people would have a clear view of Labour's priorities in government and how those differ from National's.

"We have been very clear that we believe there are a number of significant social deficits in New Zealand in health and housing and education. But also in rates of child poverty and the growth of inequality.

"We believe we have developed a package that addresses those concerns. And people will be very clear about the differences in priorities between Labour and National."

Asked about Labour's spending plan, Prime Minister Bill English yesterday indicated the country would only stay on a strong-growth track under National, and that would enable similar income relief in future years.

"It is not so much about the first one, although they will come up with something I'm sure. It's the ability for sustained economic success to deliver more benefits across the whole community."