Agenda Highlights: Cullen & English Talk KiwiSaver

KiwiSaver Unlikely to be made Compulsory

The Minister of Finance Dr Michael Cullen says the Government is unlikely to consider making KiwiSaver compulsory for employees if the scheme fails to draw large enough numbers of people.

Speaking to interviewer Lisa Owen on TVOne’s ‘Agenda’ programme today, Dr Cullen said a compulsory KiwiSaver scheme would be unfair on low-income earners.

“The trouble with compulsion is of course that for many people on very modest incomes it could be difficult for them to be forced to save at a particular time in their life”.

Dr Cullen also said Kiwisaver compulsion could mean changes to the current New Zealand Superannuation scheme, which he is not willing to make.

“It raises real issues about the New Zealand Superannuation scheme being a non-income, asset-tested payment. I am absolutely in favor of continuing the consensus around that”.

Furthermore, Dr Cullen said compulsion could see the Government having to guarantee the safety of savings, and this would be counter-productive.

“It also raises issues about if we force people to save, then do we have to guarantee their savings with a mass regulatory frame work … to ensure that they cannot possibly fail? And if they can’t possibility fail they probably won’t make very much money either, because nobody will ever take any risk on any element of investment. It is particularly hard to find any form of investment which is totally risk free”.

National could abolish KiwiSaver’s compulsory employer contribution.

National Party Finance spokesman Bill English says National could revise the compulsory employer contribution to KiwiSaver if it won the next election.

Speaking to Lisa Owen on TVOne’s ‘Agenda’ programme today, Mr English said many business owners are not happy with their forced contribution to employee KiwisSaver schemes.

“Well we are concerned about that. I think particularly small businesses felt ambushed by the compulsory contribution”.

Mr English said this expectation is okay for large New Zealand companies, but some small business owners cannot benefit from Kiwisaver’s tax credit or the reduction in company tax.

“Now at the big end of town, they can handle it. A lot of them have probably got work based superannuation. In any case, there are a large number of New Zealand businesses that are not companies so they don’t’ get the company tax cut. They are charities, they are proprietors and sole proprietors, partnerships, and they are getting no benefit from the company tax cut”.

Mr English says National is concerned the compulsory contribution will put many New Zealand employers off Kiwisaver.

“They have been ambushed by this compulsion and we are concerned that it will make employers quite negative about kiwiSaver if they are pushed into it. So we will be looking into that aspect but that is not the only aspect we will look at".

English concedes Labour in a tough economic position for tax cuts

National Finance spokesman Bill English says he still believes New Zealanders deserve a tax cut, but now is not the time.

Speaking to Lisa Owen on TVOne’s ‘Agenda’ programme today, Mr English said;

“There's only one way to deliver to every ordinary Kiwi and that’s to lower their tax rates or increase the thresholds in the tax system”.

But when asked by Lisa Owen if National would have gone ahead with tax cuts, Mr English said National would not be in the same economic position as Labour, but he understands that Cullen’s choices are limited.

“Look, we wouldn’t be in the position of a budget where Dr Cullen is caught between the rock and the hard place that he's been caught with…”.

“…We wouldn’t be caught in the same high Government spending, high inflation corner that Dr Cullen is in, which has meant that he's had to come up with something like Kiwi Saver to get rid of big surpluses without pumping up inflation.”

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