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Kremlinology: National and Kiwisaver

Written By: - Date published: 11:59 am, May 28th, 2008 - 15 comments
Categories: kremlinology, national, slippery, workers' rights - Tags: ,

National’s refusal to say what it stands for is becoming so ridiculous we have resorted to the Cold War art of Kremlinology. Today, we look at Kiwisaver.

National has had a tortured relationship with Kiwisaver. When it was first introduced in 2005 John Key described it as a “terribly designed system” and spent the next year deriding the scheme as a “glorified Christmas Club” that “won’t work” because it is “fundamentally flawed.”

By the time Michael Cullen released Kiwisaver Mark II in last year’s Budget Key had changed his tune, attacking the new turbo-charged version but describing the old version with fondness: “we think, um, the first mark I version of it worked very, you know, was probably gonna be successful and not too bad.”

Then came the unedifying spectacle of Bill English at the Kiwisaver conference in March refusing to give National’s policy on the scheme. In a media scrum afterwards, he let slip that National would keep the Government matching contributions but refused to comment on the employer contributions.

National does not like Kiwisaver and the employer contributions in particular. So, it was plausible when National’s employment spokesperson, Kate Wilkinson, said National was against compulsory employer contributions. But that was quickly retracted by Key (and we learned National spokespeople are not involved in policy development in their portfolios) to be replaced by a slightly less empty void: National would keep compulsory employer contributions in a “pretty similar” form.

The conclusion must be that National is planning to weaken the employer contribution, probably by stopping contributions at 2% from April next year, rather than growing them to 4% by 2011. This will not save the Government anything, it will still be covering $20 a week of employer of contributions but it will mean that for employees earning less than $52,000 a year employers will pay nothing. Kiwisavers’ nest eggs will be smaller but businesses will get away with contributing nothing.

15 comments on “Kremlinology: National and Kiwisaver ”

  1. alex 1

    Wait for John Key to say

    “National will not alter the Kiwisaver scheme during its first term”.

    I think Labour should push that fact it will unequivocally support KiwiSaver durings its election campaign.

    What can National say and do to convince New Zealanders it won’t alter KiwiSaver later on down the road?

  2. they could stop leaving a massive policy void that we have to fill in with guesswork. That would help.

    But it’s clear why they are so reluctant to come up with policy, even when it is just to adopt the existing Labour policy, and that’s because they fundementally don’t believe in these things and would change them if the electorate would let them.

    So, they stay as silent as possible on policy, promise as few things as possible to give themselves freer rein to do things that haven’t been publicly debated after the election.

  3. Felix 3

    National spokespeople are not involved in policy development in their portfolios

    Perhaps the most revealing aspect of this fiasco.
    I suspect it won’t be the last time we see this scenario played out either.

  4. Pascal's bookie 4

    “National spokespeople are not involved in policy development in their portfolios”

    To be fair though, have you seen their front bench?

  5. mike 5

    When the current lot put in place programmes that are overly complex to setup and administer its easier to leave them intact than try and unravel them.
    You guys should stop worrying about Nationals policy – it will all be out in good time.

    I would be more concerned that interest rates are rising again. What was one of Cullens 4 tests again??
    http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10512928

  6. gobsmacked 6

    Mike

    What’s really funny is that National supporters like you don’t WANT to know National’s policies.

  7. “businesses will get away with contributing nothing.” Surely punishing people for being in business is more reminiscent of the Kremlin than a strategic approach to policy release in election year?

  8. Tane 8

    Bryan, the Soviet Union didn’t tolerate private enterprise, the NZLP has made NZ the second easiest place in the world to do business according to the World Bank. Let’s have a bit of perspective here.

  9. In Australia, businesses have to contribute 9% on top of wages, for every worker.

    Is Australia now reminiscent of communist Russia according to you?

    And, if so, is that the reason we’re meant to believe there’s this flood of kiwis (in fact 0.67% of kiwis, within the historic cycle) heading across the ditch?

    captcha: ‘oil allocation’ – talk to Simon Tegg about that, captcha. He’ll put the frighteners up you about oil allocation to NZ after Peak Oil.

  10. Steve: we have charted migration to and from Australia since 1980. While the chart speaks for itself it appears that:
    a) the cyclical migration you refer to is more of a unicycle; apart from a couple of small blips net migration has only been from New Zealand to Australia
    b) net migration to Australia slowly increased during the nineties but has turned into a flood during the last 8 years.

    Net MIgration Australia Since 1980

  11. Bryan. That’s not what the graph shows

    It shows that migration is cycical, the current level is still below the previous peaks and that doesn’t even take into account population growth.

    As a portion of the population the number of kiwis leaving to Aussie is way lower than it was at the other peaks within the period.

    And we’re talking a net 30,000 people out of a population of 4,250,000.

  12. Steve: the net number of people who have left over the last 8 years is much greater than 30,000. The number of people who have left permanently for Australia ( the chart shows that there hasn’t been a net annual gain from Australia since the early 90’s))is around 200,000 or the population of Dunedin and New Plymouth combined.

  13. Nedyah Hsan 13

    Mike

    Cullen’s test for tax cuts is : that they are affordable, don’t fuel inflation, don’t require borrowing or cuts to services and that they don’t increase inequality.

    I hardly see anything about interest rate rises in that test, and in any event the market swap rate is determined by overseas influences.
    Namely, the imploding american market and credit crunch (that no-one actually knows whether it’s over or not!)

    Why have ANZ-National raised their rates? Well, in the wake of the blocked ING fund fiasco, could not the possibility be raised of ANZ having to build their reserves as so to pay out the losses incurred by this fund to the grannies who were coerced into putting their life savings into it? Should this ever eventuate.

    As for Cullens Test:

    that they are affordable – They really are. 3.5billion over 4 years, and of course that’s based only on current projections. I think you’ll find the loss will end up being 1billion.

    don’t fuel inflation – forget what the “economists” say. What this cut is putting back is pretty much what people are losing right now with increased mortgage rates, kiwisaver contributions, increasing rent etc. It’s only inflationary if it doesn’t cancel anything out.

    don’t require borrowing or cuts to services – we’re not borrowing from overseas. An increased KS balancesheet over the next 4 years will mean our GDP is far less due to national savings. Using todays figure of 600,000 KS entrants and an average wage of 45K, 4 billion will have been saved nationally in 4 years … I haven’t seen any cuts to services outlined in the budget either.

    don’t increase inequality – If we use the popular income graph seen on here, which includes all earners 15+, I hardly say it’s increasing inequality. Beneficiaries, currently saying “we got nothing” will find they receive another $34 weekly due to the cuts/WFF increase. I don’t know why they’re doing the “oh, yes, lets look at that” game now.

    I’d like your response to this.

  14. 30,000 a year Bryan.

  15. Lew 15

    gobsmacked: “What’s really funny is that National supporters like you don’t WANT to know National’s policies.”

    Dog whistle policy. They already know what the policies are going to be, but only they can hear it.

    Nudge nudge, wink wink, say no more. Eh? Whoar! Etc.

    L

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