New Zealand politicians kick off election campaign (News Feature)

By David Barber Jan 26, 2011, 5:51 GMT

Wellington - New Zealand's general election is still 10 months away, but leaders of the two main parties fired opening campaign salvoes this week, indicating that it will be a classic socialist-conservative clash.

Labour, which ruled from 1999-2008, is pinning its hopes of regaining government on hiking income taxes for the rich to cut them for everyone else and maintain public services and social security for the poor.

The conservative National Party, bent on winning another three years in power, will campaign on tightening the treasury's purse strings and selling chunks of state utilities to slash the national debt.

The early shots were fired as leaders of both parties returned from their summer holidays and prepared for the opening of parliament on February 8.

'Labour will rebalance the tax system so that everyone pays their fair share,' said Phil Goff, fighting his first campaign as leader after succeeding Helen Clark, who led the country from 1999 until the party's 2008 election defeat.

He said a Labour government would make the first 5,000 New Zealand dollars (3,800 US dollars) of all workers' income tax free while raising taxes for the wealthy - the exact figure unspecified, but reportedly likely to be from 120,000 New Zealand dollars.

Labour would also remove the 15-per-cent goods and services tax (GST), from fresh fruit and vegetables to ease family shopping bills.

Prime Minister John Key, who leads the National Party, said that would all cost 1.3 billion New Zealand dollars a year and Labour would have to increase overseas borrowing - already 300 million New Zealand dollars a week - to fund it.

'This year there will be no room at all for extravagant election promises,' Key said. 'We are going to campaign on being responsible managers of the economy, who make the right decisions to build a platform for future growth.'

Key said his government - which has already cut income tax, though it did raise the GST from 12.5 per cent - was determined to reduce foreign debt, which is around 85 per cent of gross domestic product.

'The only other developed countries with a foreign debt the size of ours are Greece, Portugal, Spain and Ireland,' he said. 'That is very uneasy company indeed.'

Key floated the idea Wednesday of selling up to 49 per cent of four state-owned energy companies and reducing the government's 75-per cent ownership of Air New Zealand to reduce the debt. That inevitably drew Labour taunts of selling the family silver.

The economy seems certain to dominate the campaign, with inflation at 4 per cent and the unemployment rate 6.4 per cent as the country of 4.4 million makes a faltering recovery from recession.

Opinion polls show that Goff, 57, faces a huge task to topple the affable Key, a former foreign exchange dealer who has a popular touch with people despite being the richest man in parliament.

Key, 49, is a political tyro compared with the 30-year parliamentary veteran Goff, who is capable but lacks charisma. Newspapers reported Wednesday that Goff had taken to colouring his greying hair in an apparent bid to improve his electoral chances.

Under New Zealand's proportional representation voting system, minor parties could decide who becomes prime minister for the next three years. They include the free-market ACT party and the indigenous Maori Party, both of which have ministers in the current government, and the Greens.

Other significant figures include the sole surviving representative of the United Future party in parliament, Peter Dunne, and Winston Peters, who is bidding to return his New Zealand First Party to the House of Representatives.

Both are political chameleons, having served as ministers in both Labour and National Party-led administrations, and could go either way again.