3. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Has he received advice on whether a reduction in the KiwiSaver member tax credit would raise or lower private savings; if so, what was that advice?
Hon BILL ENGLISH (Minister of Finance) Link to this
Treasury forecasts to be published in the Budget will show that private savings, taking into account the impact of the KiwiSaver changes, will lift substantially over the next few years. Of course, that will not be difficult, given that the savings rate reached minus 10 percent of household income during Labour’s term in Government.
Hon David Cunliffe Link to this
Does he stand by his earlier statement that lifting private savings will be the centrepiece of his 2011 Budget; if so, how does he square that statement with indications that the benefits of private contributions to KiwiSaver will be reduced again, amounting to a $10 tax on 1.7 million KiwiSavers?
The member needs to understand that KiwiSaver is only one vehicle for private savings. There are others—for instance, there has been quite strong growth in bank deposits, which are not subsidised by the Government. Other people reinvest in their businesses and see that as a form of savings. We believe that the combination of the tax changes made in the last Budget and the changes that will be announced next Thursday in this year’s Budget will push New Zealanders further in the direction in which they are already going, which is to significantly increase their savings. That is good for the economy.
Hon David Cunliffe Link to this
Given that he campaigned on not reducing the benefits of KiwiSaver, at all, and then hacked into it in two separate Budgets, why should 1.7 million KiwiSavers place any more weight on his integrity than they have on the Prime Minister’s promises to not raise GST and to catch up with Australia?
The fact that 1.7 million people are in KiwiSaver tells us that they have confidence in the system. There is a little event coming up later in the year called an election. New Zealanders will have the opportunity to look at a prudent and responsible programme from this Government, or a mad borrowing spree from Labour, and they will make their own decision.
David BennettThere have been a number of generally supportive comments. Some business commentators have said that if these changes make the KiwiSaver scheme sustainable, then they are a step in the right direction. ANZ wealth management director John Body said the Government’s plans appear reasonable, and prospective changes to the member tax credits are sensible. Even the Opposition spokesman on finance seemed unconcerned, saying yesterday that the changes were “hardly the stuff of headlines”. We could apply that phrase to most of the things he has said, but he also applied it to KiwiSaver.
Hon David Cunliffe Link to this
Does the Minister agree with Business New Zealand’s Chief Executive Officer, Phil O’Reilly, that any move to increase employer contributions to KiwiSaver should be limited to a total rise of 1 percent to 3 percent, and does he intend to make any increase compulsory?