Prime Minister John Key says the Labour Party leader's speech on Thursday was underwhelming, with a lot of platitudes and little policy.
Mr Shearer says New Zealand can not rely on the primary sector for future prosperity, and needs to develop a more high-tech export sector.
He says there are opportunities in education that are being missed.
Mr Key says all MPs want the things that Mr Shearer says he wants, such as good education for children, jobs, safety and security.
But Mr Key says there was nothing in the speech about how that would be achieved.
Mr Key says he agrees with Mr Shearer wanting to drop the first $5,000 tax-free band.
But he says the capital gains tax policy, which Mr Shearer is indicating Labour will keep, would slow down economic activity.
Mr Shearer gave his first major speech as leader at the Wellesley Hotel in Wellington on Thursday.[image:4811:third:right]
Labour campaigned in the 2011 general election on a 15% capital gains tax on profits from the sale of significant assets excluding the family home.
Mr Shearer said on Thursday that the tax is "pro-growth."
"It helps switch investment from sectors such as housing, to the productive sector where we desperately need more capital," he said.
However he questioned the effectiveness of Labour's present policy of making the first $5000 of earnings tax free.
He said it would be possible to look after everyone better by earning more as a country and making sure that everyone gets a real chance to earn their share, not by cutting taxes.
Schools on notice
Mr Shearer also said badly run schools would be put on notice under a Labour government.
He said the vast majority of teachers are good, but there are some who are failing their students.
Mr Shearer said he believes teachers should be paid more, but would not say whether or not he supports performance pay.
His preference, he said, is to focus on providing teachers with professional development, and to make sure teachers are respected and valued
Mr Shearer emphasised education in his speech saying it was the way to begin helping the 83,000 young people not in training or work.
Mr Shearer said these policy matters will not be confirmed until nearer the next election. He said Labour would spend the next two years listening and drawing up its plans.