Policy cost put at $1.24 billion

By Naomi Larkin

Labour will have to spend $1.24 billion over three years to implement its policies, says a report commissioned by the Auckland Chamber of Commerce and Industry.

The report, by Wellington-based economic forecasters Infometrics, claims that Labour's policies would increase unemployment and reduce growth.

But Labour's finance spokesman, Michael Cullen, last night dismissed the report as a blatant attempt by the chamber to have the Government re-elected.

"Because of the Employment Contracts Act and other matters, they want to see National back in office and they will spend whatever money it takes to try and ensure that happens."

Neither the chamber nor Infometrics had approached Labour for a detailed breakdown of the party's spending proposals, said Dr Cullen.

"This is thoroughly unprofessional. They cannot even know what our fiscal programme is because we haven't even finalised it until we get the pre-election fiscal update."

The chamber's chief executive officer, Michael Barnett, said Labour's fiscal package was "no recipe for the success of our nation."

Mr Barnett said that, based on Labour's policy announcements, the $1.24 billion would be spent in the years 2003 and 2004 in the following ways:

* Business assistance programme, $150 million.

* Income-related rents for state houses, $75 million.

* Increased education spending, $500 million.

* Health spending, $140 million.

* Returning national superannuation payments to couples to the "65 per cent average wages" floor, $375 million.

Mr Barnett said state dependency would increase and New Zealand's long-term prosperity hopes would be put on permanent hold.

But Dr Cullen challenged the chamber to "wait for clear details of what our fiscal bottom lines are, and recognise that any Government will vary its fiscal programme over time in order to meet its fiscal targets."

The Alliance also came under fire in the report.

Mr Barnett said that as Labour's obvious coalition partner the Alliance would "significantly increase spending pressures."