20 May 2011

English rules out further changes to KiwiSaver

5:01 pm on 20 May 2011

The Finance Minister has ruled out any further changes to KiwiSaver or Working for Families so long as a National-led government is in power.

Parliament passed cuts to the schemes announced in the Budget under urgency on Friday afternoon.


Under the changes, which only take effect if National wins the general election on 26 November, government contributions to KiwiSaver will be halved and employer contributions will no longer be tax-free.

Working for Families tax credits will also be reduced for thousands of families.

Mr English was asked by reporters on Friday morning whether a National-led government will change either scheme again.

"No," he said. "We've made changes to those programmes which we believe put them on a sustainable footing and we're not planning to make changes to them in the future."

Confident of delivery

Earlier, Mr English said the Government is confident that Budget projections can be delivered on, and that New Zealanders are starting to get into a more positive frame of mind.

Asked on Nine to Noon about projections of growth and future surpluses, such as 4% growth by 2012, Mr English said: "We're pretty confident that those can be delivered.

"The decisions that will drive it, of course, aren't made by the forecasters or necessarily the Government. They're about the households and businesses across New Zealand who we think are starting to get into a more positive frame of mind, because it's their decision to invest or to save or to create a new job that will drive the growth.

"They're going to be helped by a couple of things. One is that our export prices are the highest in a generation and the markets we're selling to - particularly China and Australia - are the fastest-growing economies in the world; and there is going to be $15-20 billion spent in Christchurch that will have an impact across the whole economy."

'We've all got to buckle down'

Mr English says the projections were drawn up independently by Treasury, so they are not a political wishlist.

The economic recovery has to be driven by earnings, not borrowing, and the minister says "we've all got to buckle down".

Mr English says, however, he is more optimistic about the country's future debt position than the Budget forecast that net debt (public and private debt together) will fall over the next three years, largely because of reinsurance money flowing into Christchurch, but rise again to 85% of gross domestic product by 2015.

If New Zealanders stick with their new habits of spending less and saving more, net debt will not balloon as forecast, he says.

Mr English also expects people will welcome the chance to invest in assets such as the four state-owned energy companies the Government intends to partially privatise.