NZ First ideas a strain on coffers

Winston Peters

Labour Government Budgets may face added strain if it agrees to any substantial boost to superannuation payments - a key part of New Zealand First's Golden Age Card.

A new Labour Administration is unlikely to give up election promises, such as interest-free student loans and expanding Working for Families. Together the promises are estimated to cost $3.5 billion over the three years to 2008-09.

The question is how many concessions Labour offers NZ First leader Winston Peters on his party's five key priority areas - the card, more police, an economic plan to boost exports and wages, immigration, and Treaty of Waitangi and race issues.

The sketchy cost estimates of NZ First's key policies show that over the same period they would cost more than $4 billion. Labour would not commit to anywhere near that figure.

Mr Peters revealed the card plan in April, the key plank being to raise superannuation from 65 per cent of the net average wage to 68 per cent and finally 72.5 per cent.

The card also gives benefits like subsidised transport, and power, gas and telephone line charges.

Mr Peters estimated the cost of boosting the super entitlement to 68 per cent - along with the other benefits - at about $700 million a year.

At the time Finance Minister Michael Cullen called the policy "ruinously expensive", revealing Treasury estimates that lifting super to 72.5 per cent would cost $630 million in the first year, rising to $1.68 billion after 10 years.

It would also tamper with his beloved NZ Super Fund. He estimated contributions to the fund would also have to rise to an estimated $3 billion a year in 10 years' time to cover the higher pension payments.

Figures released yesterday by Social Development Minister Steve Maharey show a middle road - a 67.5 per cent floor - would cost $260 million in 2006-07 rising to $310 million in 2008-09.

Other NZ First policies are axing GST on petrol, which it estimates would cost $1.8 billion over three years, and 5000 more police, costing an estimated $600 million over the same period.

Dr Cullen is almost certain to resist cutting GST on petrol, but Labour has already promised 250 more community constables so there is room to move there.

In general there are few policy fishhooks between Labour and NZ First on many economic fronts.

Both favour a more "hands on" approach to economic development than National, and neither wants state assets sold.

NZ First's goal to raise the minimum wage from $9.50 to $12 an hour is likely to achieve progress given Labour has been increasing it every year anyway since coming to power.

The Greens, Labour's other probable support party in government, also wants a $12 minimum wage.

Initiatives on the Green Party's wishlist add up to far less than NZ First's, as many are regulatory moves. Some with costs attached include boosted conservation programmes ($150 million over three years) and home insulation and energy efficiency initiatives ($30 million over three years).

NZ First and Labour differ markedly on overseas investment in New Zealand and free-trade deals with low-wage nations like China.

Labour wants more trade deals and is driving one with China, but Mr Peters is unlikely to hinder it.

NZ First policy is to restrict foreign ownership of "strategic" assets to 24.9 per cent (there are few restrictions now) but Labour won't be keen on that and neither will the business community.

On Treaty issues, if Labour agrees, there will be extra costs in giving the Waitangi Tribunal - or NZ First's proposed replacement - more resources to speed up claims.

The one thing NZ First would probably insist on is supporting Mr Peters' private bill to delete Treaty principles from existing legislation.