Hon Trevor Mallard
Minister of Labour

27 May 2008 Media Statement

Workers to lose KiwiSaver boosts for Nats tax cuts

The National Party looks set to make workers in KiwiSaver pay the price for John Key’s big tax cut plans at the election, Labour Minister Trevor Mallard said today.

Trevor Mallard appeared at an employment relations forum with his National counterpart Kate Wilkinson this morning. At the forum Ms Wilkinson made it clear the National Party would not support compulsory employer contributions for KiwiSaver.

"This is a reckless move that would save National billions of dollars but destroy people's retirement savings plans, as well as removing the significant benefits to the economy of encouraging people to save rather than spend. And all for the sake of Mr Key's tax cuts," Trevor Mallard said.

"Cutting employer contributions would lead to an overall lower uptake of KiwiSaver and would mean the government would not have to provide the KiwiSaver employer tax credit that compensates businesses for contributing to the scheme.

"KiwiSaver has been a huge success for workers – we now have more than 600,000 New Zealanders in the scheme," Trevor Mallard said.

"The introduction of employer contributions on 1 April led to a massive surge in KiwiSaver numbers as people jumped at the opportunity to get a helping hand in saving for retirement. What many people forget is that the bulk of the employer contribution is actually paid for through a government tax credit.

"John Key has always pretended that he could be trusted with KiwiSaver, even though as finance spokesman in 2005 he promised to scrap it to pay for tax cuts. But after last week’s Budget revealed there is very little fiscal room to move, Mr Key knows he has a real problem as he has pledged to ‘out tax cut’ Labour at any cost.

"Cutting employer contributions would free up to $2.4 billion over four years.

"But it would also rip the heart out of KiwiSaver. More than a quarter of our workforce – spread across income brackets – have put faith in KiwiSaver because they know our savings problem is real and they know that saving for retirement matters.

"John Key cannot be trusted to protect KiwiSaver for New Zealand workers and he has shown he is not serious about addressing New Zealand’s long-term savings challenge."

ENDS

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