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Home / Politics

<i>Bill Ralston</i>: Cullen not quite a lame duck

By Bill Ralston
Herald on Sunday·
17 May, 2008 05:00 PM4 mins to read

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Opinion by

KEY POINTS:

What is happening when barely three dozen Canterbury manufacturers and exporters can drag themselves to a pre-Budget lunch with Finance Minister Michael Cullen?

An hour with a politician may not be your idea of a good way to spend your lunch break but, traditionally, top business leaders flock
to hear what the guy who controls the country's purse strings has to say.

Besides, Cullen is a witty and entertaining speaker and, as he neatly eviscerates his enemies, there would be little chance of falling asleep face-first into your prawn cocktail.

Tickets were priced rather steeply at up to $196 but these guys regularly pay that, without flinching, to fill up their Aston Martins. Maybe no one makes or exports anything in the South Island any more and the entire Southern economy is now fuelled solely by cows and tourists.

More likely, the business community no longer cares what Cullen says because it believes he is a lame duck and whatever he does in this Budget can be remedied when National comes to power.

For them this is dangerous. While the polls show National with a considerable lead over Labour in the popular vote, it will be almost impossible for John Key to win more than 50 per cent and govern alone.

Labour just needs a few more points and, with friendly third parties, it could weld together yet another minority government.

In that lunchtime speech, Cullen gave a strong indication of how the Government intends to win.

Labour will incentivise its core support to turn out on the day. It doesn't have to win new voters to its cause, it just has to make sure the people who put it in power last time come back and vote for it again.

Thus Cullen talked down the hopes of tax breaks for the middle incomes and middle class. They are trending to the National side of the political divide and Cullen knows National will outbid Labour in giving them tax cuts.

From his perspective, what is the point in giving them anything if they will not vote Labour?

Instead, he said the cuts would be aimed at those who needed help the most, the poor and those on low incomes. His strategy is simple, give them something to lose, dangle the spectre of an evil National Government ripping away their newfound cash and they will troop out in droves for Labour on polling day.

Added to that mix, designed to appeal to Labour's core support who have become dangerously apathetic in the past few years, he emphasised "feel-good" initiatives such as buying back the railways.

Fear is a great motivator. Labour, through this Budget and all its messages in election year, will target those who voted for it last time saying, "Look what we've given you, you can't trust National, they'll strip your wallets, sell the family silver and just look after the 'rich pricks'."

No one understands how to work MMP better than Helen Clark and no one has worked it so well as she has.

In theory, Labour should be dog tucker. Over the next few months most people's spending power will shrink, the value of their assets will fall, and unemployment will rise. That usually means whatever government is in power will get a caning.

But Labour's strategy of giving just enough to the right people might be enough for it to scrape home.

National's biggest enemy is complacency, as supporters and swinging voters who might generally favour it drift into a non-vote in the assumption that the party will sweep to victory.

For National, mobilising the punch-drunk, middle-income earners is its key to victory.

For decades successive governments have milked middle-income earners through punitive rates of tax, while delivering the goodies to either those on low incomes or those who are ridiculously wealthy.

It has not mattered who was in power and whether they favoured rich or poor, the battered buggers in the middle bracket paid the price.

The past decade has seen a big growth in those defined by IRD as middle and high income earners. "Bracket creep" has meant many have had gradual wage increases that have pushed them through higher tax brackets. Despite those wage increases, they still feel relatively poor, and they are.

Act recently worked out that all workers should receive an average tax break of $35 a week because the Government, by stubbornly refusing to raise the threshold levels in line with the cost of living, has hoovered billions in tax out of bracket creep.

Watch the Budget this week. It holds the key to the election if Cullen can find enough cash to bribe Labour's low-income supporters while keeping the middle incomes dazed on the ropes.

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