Shearer hints at harder-line welfare policy

Labour leader David Shearer during his breakfast speech at the Wellesley Hotel. Photo / Mark Mitchell

Labour party leader David Shearer has indicated that any future Labour Government would keep a capital gains tax, but shed a $5000 tax free zone.

And Mr Shearer hinted that he would have a more hard-line welfare policy, where everyone should be contributing to the workforce if they could.

The Opposition leader used his breakfast speech in Wellington this morning to say that the New Zealand economy was too dependent on property market bubbles and farming.

To become a highly skilled export-focused economy, New Zealand has to invest in education - in particular the quality of teachers and early childhood education, to turn the 83,000 young people not in education or training into a highly skilled workforce.

He said Labour policy was under review, and no final decision had been made.

But he described a capital gains tax as "pro-growth".

"It helps switch investment from sectors such as housing, to the productive sector where we desperately need more capital. Over time I can also see the revenue it raises being used to offset the tax you have to pay in other areas. So I can see a role for CGT in transforming our economy.

"On the other hand, I would want to ask whether a tax-free zone that gives everyone the same sized tax cut is going to be as much of a priority. I believe we can look after everyone better, not by cutting taxes, but by earning more as a country and making sure that everyone gets a real chance to earn their share."

The focus of his speech was education, including a promise to invest more in teachers and early childhood education.

"Ultimately we can't afford to have bad teachers in our classrooms. As a parent, I want to put badly run schools on notice. I expect excellence from every school.
"Experts agree a dollar spent on a child before five will save $11 spent on crime and welfare later.

"The fact is there are 83,000 young people not in training or work. I want to fix that and the place to start is in education. That's where the opportunities are being missed.

"Everything else is bottom of the cliff stuff."

Labour's priority would still be to take care of the needy.

"They deserve a share of the pie. And if people fall on hard times, we will help. But equally importantly, number two: everyone who can help to make that pie needs to be involved, and fairly rewarded for doing it."

Prime Minister John Key described Mr Shearer's speech "underwhelming''.

He said most politicians had very similar objectives - "that kids get a decent education, that we all live happy and healthy lives, we all have good secure jobs and are safe in our communities.''

All 121 MPs probably thought that.

"The issue is the how and there was absolutely no `how' in that speech from David Shearer today, not one bit of how.

"By the way every time they have looked in areas like education they have sided with the education unions, not in terms of making change.''

Mr Key said it would be good if Labour decided to support national standards because one of the fastest way to determine if a teacher was not performing well was through national standards.

"Saying he wants kids to do well at school and saying he wants to do more in the education system but not telling us how he is going to do - it ain't going to cut it in my book.''

"At the moment you've got a lot of platitudes; you don't have any policy.''

Mr Key said he agreed with Mr Shearer's hint he would drop its policy of making the first $5000 of income tax-free.

It had been a ''stupid'' policy because it had been distributionally "crazy.''

But he stood by his opposition to a capital gains tax saying it would not work well.

It would take a decade to get any decent revenue and it was "a realisation tax that slows down economic activity'.'