Dawn Chorus: Let the bidding (and inflation) begin

Luxon will be hoping his ‘FamilyBoost’ policy can tempt voters away from Labour, but he will also have to convince both voters and inflation-watchers that the policy is worth the risk of adding to inflation. Photo: Lynn Grieveson / The Kākā

TLDR: National has launched a policy to increase Government subsidies for pre-school childcare, outbidding a similar one set out last year by Labour, but Labour has pledged to come back with another one later this year.

Both bids of middle-class welfare to win median voters in the October 14 election risk simply pushing up prices of childcare, inflating the profits of the mostly-privately-run sector and/or inducing extra demand that increases the overall bill to the Government.

Let the bidding begin, where the two main parties offer to pay back taxpayers some of the money they have paid in GST and income taxes, restricting the size of the tax take closer to the 30% limit targeted by both parties, and leaving capital income untaxed.

I include more detail and analysis of the childcare policy auction for paying subscribers below the paywall and in the podcast above.

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