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Factbox-New Zealand voters' top issues in October general election

(Reuters) - New Zealanders go to the polls on Oct. 14 to decide whether to return the Labour government to a third term, or change direction with the centre-right National Party.

Here are the main issues expected to dominate the debate over the next month.

COST OF LIVING

With inflation running at a brisk 6% and the official cash interest rate at its highest in 15 years, middle class New Zealanders are struggling to afford things they once took for granted.

Chris Hipkins, who took the prime minister's post in January after Jacinda Ardern stepped down, has nudged his Labour Party towards the centre, focusing on what he terms "bread and butter issues". The government has raised childcare subsidies, cut public transport costs and begun providing more free school lunches, aiming to support people on middle incomes.

The opposition National Party has blamed Labour for rising costs and is promising, if elected, to cut taxes and bring inflation under control.

HOUSING AND INFRASTRUCTURE

The Labour government has struggled to resolve an acute shortage of affordable housing, with rents at a record high and state-owned Kiwibank estimating a shortfall of 23,000 homes in the year to June.

The government has committed to building more than 3,000 publicly owned housing units by 2025 and says that, since coming to office six years ago, it has increased the number of public housing units by more than 12,000.

Given New Zealand's ever-increasing building costs, poor housing stock and overcrowding, however, supply continues to fall short of demand. The National Party has proposed unlocking more land for housing, providing incentives for councils to build more houses and creating new infrastructure financing tools.

Other hotly debated issues include how to fix ageing water infrastructure, whether the government should build more roads and bridges, and how to improve public transport.

FOREIGN POLICY

For the first time in almost 40 years, foreign and defence policy is an election issue in New Zealand, as opinion polls show the public growing concerned about the security environment and the major parties wrestle with how to respond to an assertive China in the Pacific.

China's growing presence in the Pacific region, and especially its decision to sign a security pact with the Solomon Islands, have brought strategic challenges closer to home.

Labour's tone has toughened towards security and Beijing's growing presence in the South Pacific, while National says there is little difference between the two parties on foreign policy.

CLIMATE CHANGE

New Zealand's Labour government has pushed through a number of new laws and regulations during its time in office aimed at making the country's emissions net carbon neutral and reducing agricultural emissions. Its plan to tax on-farm emissions from the end of 2025 has met significant opposition from rural communities, which think it will increase production costs and hurt competitiveness in foreign markets.

The conversion of sheep and beef farms into forestry – and the resulting carbon credits - are also being heavily debated.

The National Party is promising to push out the start for taxing agricultural emissions until 2030, while lifting a ban on genetic engineering and modification, and limiting the conversion of farmland to forestry.

ECONOMY AND BUSINESS CONFIDENCE

New Zealand's economy is in a technical recession after two quarters of negative growth, while the country's balance of payments deficit reached 8.9% of GDP at the end of last year, a more than three decade high.

When Hipkins became prime minister in January, his first day on the job was spent talking to business leaders. The party points to near-record employment, support for low-income families, and its plans to bring down debt as key accomplishments.

The National Party says it will encourage trade and investment, increase the skilled labour force and cut red tape.

Business confidence has improved slightly in the past few months, from a record low in December, as inflation has started to ease with the slowing economy.

SOCIAL JUSTICE

There is a growing backlash among some right-wing groups against increased Maori involvement in public policy decisions and the management of certain state assets.

The government's move to create a separate healthcare system for the country's indigenous people has drawn criticism from some opposition and right-wing interest groups, as has the growing use of the Maori language in government documents, for government departments, and recently on street signs.

At the same time, Maori, who make up 15% of population and whose ancestors were dispossessed of much of their land during colonisation by Britain in the 19th century, are increasingly vocal in asserting their interests.

(Reporting by Lucy Craymer; Editing by Edmund Klamann)