Cunliffe hits back at anonymous critic; Labour languishes in polls; Winston Peters would take GST off food and rates, but would impose CGT on foreigners

By Bernard Hickey

With less than two months left until the September 20 election, here's my daily round-up of political news from in and around Wellington on Monday July 21, including David Cunliffe's reaction to an anonymous Labour source's complaint about his Queenstown skiing holiday and New Zealand First's economic policy launch on Sunday.

Cunliffe arrived back from his 3 day holiday to find an anonymous "senior Labour source" criticising the holiday in the Sunday Star Times .

"It sounds a little treasonous, but the guy doesn't want it badly enough. If he did, he would be working. I think it is disgraceful behaviour, and not the sort of behaviour becoming of a guy who wants to be prime minister," the source was quoted as saying.

"We will be having a talk to David at caucus about his work ethic on Tuesday. We'll be letting him know he's got two months to turn this around, and we're backing him and right behind him but he's got to lift his game," the source said, adding 20 of the 33 Labour MPs were deeply unhappy with Cunliffe's leadership.

Various media reported Labour MPs had a long-planned meeting in Auckland on Sunday to discuss the latest developments, and campaign planning. Tracy Watkins reported Cunliffe's performance had not been singled out at the meeting and there had been no discussion of him standing down.

Cunliffe said yesterday he had taken two days off last week because of the flu and then gone to Queenstown for a three day holiday with his family. He defended his decision and attacked the anonymous source.

"I was urged to do so to recharge the batteries before the crucial part of the campaign, the major debates and so on. I work pretty long hours - probably about 18 a day - and the advice I was getting was that I was a bit tired and needed a refresh," Cunliffe said.

"There's been a great deal of disappointment by Labour people about whoever made those comments and who hasn't had the integrity to stand up and put their name to them," he told Radio NZ.

Key returns

John Key arrived back from his holiday in Hawaii to hold a news conference in Auckland with Murray McCully to call on Vladimir Putin to force separatists in Ukraine to allow an investigation into the shooting down of MH17.

Key also pointed to the anonymous criticism of Cunliffe as a sign of disunity within Labour.

"If you can't manage yourself, you can't manage the country," he said.

Elsewhere, Key said he would make a decision about whether to cut a deal with Colin Craig and the Conservatives over standing a National candidate in East Coast Bays within two weeks. He noted that Craig wanted National to step aside completely in the electorate, which was something National had not done in Ohariu or Epsom.

"I just think that that's a very challenging thing to do because it relies on the fact that some other person doesn't put their name forward, either Winston Peters or somebody else," Key told the news conference.

Meanwhile, he weekend poll results were not encouraging for Labour either.

Poor Labour polling

3 News' Reid Research poll showed Labour down 0.6% at 26.7% and National down 0.3% at 49.4%. Internet-Mana's support rose 0.5% to 2.3% and Conservative support fell 0.1% to 2.7%.

The Herald on Sunday's Digipoll found support for Labour fell 4% to a 15 year low in the poll of 26.5%, while National rose 4.5% to 54.9%.

Winston Peters' policy

Elsewhere, Winston Peters delivered a speech at New Zealand First's convention at the Alexandra Park Raceway. In it, he announced New Zealand First would remove GST from "all the basics of the household food budget," at a cost of NZ$3 billion a year.

He said it would be paid for by a "clamp down on tax evasion and the black economy," and from "drawing on the projected surplus of billions in the years ahead that result from running a sound economy."

New Zealand First would also remove GST from council rates on residential property and cap interest rates charged by loan sharks.

Peters said New Zealand First would extend capital gains tax to foreign ownership of land and homes, but it opposed "an extension of capital gains tax without compensation for capital losses" by New Zealanders.

Peters also suggested in an interview with Paddy Gower on The Nation on Saturday he might stand in East Coast Bays. But he denied it in an interview on Sunday with Michael Parkin on Q+A.

Green ECE policy

Green Co Leader Metiria Turei announced a Green Government would extend the current 20 hours of free early childhood education (ECE) to two year olds at a cost of NZ$297 million a year, rising to NZ$367 million in four years time.

"About two thirds of all two-year-olds are currently enrolled in ECE, but their parents miss out on the '20 Hours' subsidy given to three and four year olds. We will make the system fair by extending the same subsidy to the large number of two-year-olds in ECE," Turei said in releasing the full policy.

"Extending 20 hours free ECE to two-year-olds will make a real financial difference to thousands of families. We estimate that families with two-year-olds in ECE could be up to $95 a week better off under our policy. By reducing the high cost of ECE in New Zealand we can both help struggling families access ECE and directly assist in reducing their weekly outgoings," she said.

KiwiSaver guarantees?

Meanwhile, the Financial Services Council has released an Infometrics report showing that KiwiSaver investors would be better off over the long run with capital guarantees for their funds, rather than staying in conservative default funds.

"This new research shows guarantees for KiwiSaver paid for by the KiwiSaver and backed by the Crown Balance Sheet appear to deliver significant benefits for KiwiSavers at minimal cost," FSC CEO Peter Neilson said.

He said FSC was asking all political parties to consider changing the default option for KiwiSaver so that younger New Zealanders defaulted into balanced or growth funds with "appropriate guarantees paid for by the KiwiSaver."

"They will pay relatively little to buy a guarantee – and end up far better off when they retire. It’s important we have some long term thinking to reap the maximum protection and benefit for the younger generation who work and save for a lifetime," Neilson said.

'Innovative idea will be considered'

Labour Finance Spokesman David Parker described the changes suggested by the FSC as 'innovative' and that Labour would seriously consider them as part of plans to make KiwiSaver universal.

“Currently young people are defaulted into conservative funds that invest mainly in bonds and cash rather than productive businesses. These also limit the amount young people can save for retirement. Today’s research from the Financial Services Council shows that ‘capital guarantees on KiwiSaver balances are a much better deal for KiwiSavers than defaulting them into conservative funds’," Parker said.

“This is progress towards default schemes being able to reflect the stage in life of contributors. For example they would ensure those saving for a first home deposit have their contributions protected. Guarantees protect investments for young people if they wish to withdraw them to buy a house in bad economic times. People closer to retirement are more likely to be in a conservative fund so guarantees are less likely to apply to them," he said.

(Updated with Green ECE policy announcement and details, comments on KiwiSaver capital guarantee idea)

I'll keep updating this through the day.

See all my previous election diaries here.

See the index for Interest.co.nz's special election policy comparison pages here.