4. SHANE JONES (Labour) Link to this
to the Minister of Finance
What recent reports has he received on the KiwiSaver scheme?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I have seen many positive reports on the scheme, both from within and outside New Zealand. A typical statement came today from the Investment Savings and Insurance Association: “The savings industry welcomes KiwiSaver as a major step towards an effective, efficient, and easily accessible long-term saving option.”
Hon Dr MICHAEL CULLEN Link to this
Yes. I have seen a 1998 report that states that increasing national savings is New Zealand’s key challenge. The report goes on state: “I’m frankly not sure how this culture of low household-sector saving can be changed.” Unlike the author of that report, the then Governor of the Reserve Bank, now the Leader of the Opposition, who could point only to higher interest rates as the solution, this Government does have ideas for addressing the challenges that face savings in New Zealand.
John KeyWould rising after-tax wages assist workers’ ability to save; if so, what is the impact on after-tax wages when a worker’s taxes are reduced?
Hon Dr MICHAEL CULLEN Link to this
Unfortunately in New Zealand, as after-tax wages have increased over the last 10 years, people’s borrowing has increased even further. I am afraid we show a high propensity to borrow, rather than to save, out of increased income, which may be why, privately, the member has been saying he supports the KiwiSaver scheme, while publicly opposing it.
Hon Dr MICHAEL CULLEN Link to this
Yes, I have seen a report claiming that the scheme, which follows pretty standard managed funds savings schemes, represented a glorified Christmas club. Although saving 4 to 8 percent of one’s income may seem like Christmas savings to former merchant bankers, most New Zealanders would see that as covering a little more than a Christmas hamper.