Labour unlikely to reverse GST rise

Labour leader Phil Goff has indicated that Labour is more likely to rejig income tax thresholds to benefit low and middle-income earners than reverse the increase in GST expected in this month's Budget.

He and the Labour caucus will travel to Nelson today for a three-day charm offensive including community visits, a full-day caucus retreat followed by a public meeting, and a pre-Budget speech by the Labour leader to the Chamber of Commerce on Wednesday.

National is expected to increase GST to 15 per cent in the Budget to offset tax cuts. Although Labour opposes the GST increase, Mr Goff has refused to commit himself to reversing it, indicating that Labour was more likely to change tax thresholds and rates.

"Our options include reversing it, which would be about $2 billion worth or, since GST is being used to fund tax cuts, engineering those to be fairer to middle and low-income earners."

Mr Goff said the Budget would take place in the context of an improving economy and his priority was to make sure it was those on low and middle incomes who benefited from the recovery, both financially and in jobs and training opportunities.

He has also begun to consider the shape of his team for the 2011 election. He said he expected to do a reshuffle well before then and would be seeking out MPs who might be retiring so he could put them into back-seat roles.

Mr Goff said some had already told him of their intentions, including Lynne Pillay, who has said she would not stand again.

At its all-day caucus, Labour will also consider its progress on new policies for the election. Mr Goff said the party was investigating as broad a range of possibilities as possible.

Options being looked at included compulsory superannuation or boosting KiwiSaver incentives to help fund the retirements of the baby-boomers.

He was also considering making vegetables and fruit GST-free, although no decisions had yet been made.

He said the Government was opening itself up to criticism on a number of fronts, including its proposals for mining and policies such as the Maori Party's Whanau Ora social programme, which will get $135 million in the Budget.

He believed the Government was setting Whanau Ora up to fail by rushing it into place before all the groundwork was done, simply to get something onto the Maori Party ledger.

Mr Goff said he intended to make regular regional caucus visits part of Labour's attempt to reconnect with voters.