1. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
How will the Budget next week help lift national savings?
Hon BILL ENGLISH (Minister of Finance) Link to this
Primarily by showing a credible path back to surplus so the Government can reduce the amount of borrowing it is doing. However, we will be able to do this at the same time as boosting front-line health and education services and helping pay for the rebuilding of Christchurch.
What are some of the Budget changes that will help the Government return to surplus and contribute to higher national savings?
The Budget will include changes to KiwiSaver, Working for Families, and student loans, which are large programmes that collectively cost the taxpayer about $5 billion this year. These programmes were introduced at a time when the economy appeared to be growing but in fact was in the midst of a bubble of consumption, debt, and housing speculation, and the Government has had to borrow heavily to maintain these programmes through the recession.
The Government intends to reduce the amount of money it has to borrow from overseas to put into KiwiSaver accounts, and increase the amount of genuine savings from the private sector. As the Prime Minister has outlined, the $1,000 kick-start for new KiwiSaver members will remain as it is now. Changes will maintain total contributions into KiwiSaver funds, which are expected to grow rapidly from about $8 billion now to almost $60 billion in 10 years’ time. These changes will not happen immediately and will not affect people until after the election.
Hon David Cunliffe Link to this
Why did his Government cut the KiwiSaver default contribution rate for members and employers in 2008, given that the Prime Minister’s big announcement today is that he will seek to reverse his own change?
The member may recall that KiwiSaver was at the time costing the Government somewhere around $1.5 billion. We made a number of changes to it that made it affordable, particularly in the light of the significant global recession affecting New Zealand, and as part of the tax package we brought in in December 2008.
Hon David Cunliffe Link to this
If KiwiSaver needs to be durable and sustainable, as he used to say, how is his Government promoting that durability by flip-flopping on member and employer contributions and breaking his party’s promise not to cut member tax credits, when the average Kiwi now thinks they cannot rely on this scheme under this Government?
The Government is committed to the durability and affordability of KiwiSaver and we have managed to maintain the scheme through the most difficult economic times the country has had in a long time. We are simply not willing to keep borrowing to put money into people’s savings accounts and calling it savings.
Has he seen any conflicting reports about the suspension of New Zealand Superannuation Fund contributions by the Government during this time of large Budget deficits?
Yes, I have. In fact, just yesterday the Opposition finance spokesman maintained his consistent line, which is to attack the Government for suspending payments to the Superannuation Fund. However, on 21 March Phil Goff said that when one is in a position of low economic growth one slows the payments down; when one gets into a position of high economic growth, one speeds the payment up. That is pretty much a summary of the Government’s policy. I wish the finance spokesman and the Leader of the Opposition could agree on Labour’s position.
Has the Minister seen any other reports about superannuation that might concern older New Zealanders?
I have. Although the Government has set out to protect national superannuation rates and eligibility, the Leader of the Opposition now seems to be floating a proposal for a two-tier national superannuation system where those who retire early get less than those who delay their retirement.
Hon Trevor Mallard