Revenue Minister Dunne says KiwiSaver's future lies with higher employee and employer payments, less govt help; Favours compulsion

Revenue Minister Dunne says KiwiSaver's future lies with higher employee and employer payments, less govt help; Favours compulsion

By Alex Tarrant

The future structure of KiwiSaver should see higher contribution rates for workers and their employers and a lower share of funding from government, Revenue Minister Peter Dunne says.

Speaking to the New Zealand Credit and Finance Institute's national conference in Auckland on Thursday, Dunne also said his personal view - one his party UnitedFuture carried into the 2011 election - was KiwiSaver should be compulsory.

KiwiSaver had been very effective in attracting new members, but at a high cost to taxpayers, with the scheme costing the government over NZ$1 billion a year in subsidies and tax breaks, Dunne said.

"To put it plainly, it is not really saving if the Government is borrowing from overseas with one hand to put into an individual’s account with the other. Doing it that way simply amounts to all taxpayers bearing a greater tax burden to cover the cost of the borrowing," he said.

"Budget 2011 put the brakes on this somewhat because reducing Government contributions and increasing private contributions to KiwiSaver will also lift national savings. It is calculated that these changes to KiwiSaver will save taxpayers NZ$2.6 billion over four years and help lift national savings."

While KiwiSaver was a good scheme, to be truly valuable its future lay in "a larger share of contributions coming from members and employers, and Government providing a lower share, but better targeted incentives," Dunne said.

"And looking ahead, the inevitable question is, should KiwiSaver be compulsory? It is a question worth asking with arguments for and against. Personally, I have always favoured the idea, and I believe New Zealanders are coming around to it," he said.

"Kiwis have an increasingly mature and real view of the big world out there, and how they need to prepare for their future. In 1997 New Zealand categorically rejected a referendum on the issue. The rejection was huge – in the vicinity of 93 percent. Times have changed and I believe the views of New Zealanders have shifted quite substantially in this area.

"So the very fact that New Zealand is asking these questions now is a good sign for the future. I must acknowledge that compulsory KiwiSaver is not, however, Government policy. But what the wider debate indicates is an understanding of the importance of national savings and a willingness to engage in debate on the issue," Dunne said.

Labour welcomes it

Labour Party Finance spokesman David Parker used Dunne's comments to attack National's stance on KiwiSaver, saying more needed to be done to reduce New Zealand's private debt levels.

Labour contested the 2011 election on a policy to make the scheme compulsory and raise employer KiwiSaver contributions to 7% over nine years, while keeping the minimum employee contribution at 2%. Currently, aside from those who voluntarily join, workers who start a new job are automatically signed up to KiwiSaver but given the option to opt out. 

Those who have not signed up voluntarily and have been in the same job since KiwiSaver began five years ago

Minimum employee and employer KiwiSaver contributions are set to rise from 2% of a person's wage to 3% from April next year. The government has also halved the 'member tax credit' it pays out to people who pay at least NZ$1,042 into their KiwiSaver accounts annually - before changes in Budget 2011, the government would match that amount.

Budget 2012 also saw the government scrap a plan to automatically enrol every worker currently not in the scheme into KiwiSaver in 2014, but give them the option to opt out again, a move tagged 'soft-complusion'.

However, the NZ$514 million cost over four years would have meant the government would not have returned to surplus in the 2014/15 year, and the plan was set aside indefinitely until sufficient surpluses were reached to afford the move.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Holy Smeg!
7% for Kiwisaver, 12% for Student Loan, 30% (PAYE). Bang 50% of Gross Income gone! 
Smoke me a kipper, I'll be getting the *&%$## outa here by Christmas!

Don't forget 15% GST on the remaining :-).
 
 

Try having had marginal tax at 39%, student loan 10%, ACC 2%, Kiwisaver 4% and then 12.5% of most of the rest as GST!

Training, yeah ive had a bosses who thought that,...the first one wanted me to do a fuel dump and explosives course(s) as I looked after such installations on RAF airfields.....but I had to pay the 10k+ sterling via a company loan at 20% that he "organised" for me and have my own car at my expense so I could spend most of my life driving around them. My answer was no. I said I might pay for a high voltage course as that was usuable outside but taht wasnt acceptable to him. Sadly for him I resigned some days later....he blew his stack.....kicked me out with 30mins notice for "security" reasons, I sued him for lost wages....won, came here for a holiday....never went back.
Also had similar in NZ, my then boss wanted me to pay for a MAC hardware course so the company could charge $125 an hour for my labour....I declined and moved a week later...he wasnt happy either, he said if he found out I was looking for another job he's sack me immediately.......there are always assholes....
Otherwise Ive paid for some training, typically though its $5kNZD for 4 days but most courses are in OZ so a flight and 4 nights accomodation....not something I do much not now.  These days Im told that "we cant afford it" my answer is well we wont be using it then. Really most bosses have no idea how complex systems are now..........so they cough up for consultants to install it and support contracts at 25% per annum to do it....and then complain of the blow out in Opex....oh, and now I laugh, complain about me asking for hours to research....or how long  it takes to fix.......severity 1s hurt their bonuses....doh.
regards
 

Where do you think you can go that will be different?
Personally I think PAYE will be 40%+ before too long....but its going to be similar everywhere....the age of tax dodging and moving is passing....
 
regards

Thats smart during a recession, raise business costs, good one Peter, now why dont you go support the erosion of the government revenue stream by selling a large chunk of our best SOEs. Awesome

Peter Dunne is the leader of the party of one
he is nothing more than a political prostitute
just another tax grab from the left.
Baz

"left"? LOL.... Dunne is right of centre....

No ,nah Steven......Baz has a point Dunne was from the left to the right , then left of right, then right of left, then right, then righter than right untill he gets.....left behind next time.
Quintessentially Dunne is a swinger.....whatever it takes to keep the Thursday hairdoo appointment. 

Peter Dunne is not right of centre . The party of one is revenue minister for labour and
national . yea centre right if he carnt lower taxes across the board he is LEFT nothing else
can be said.The poor economic state of most of the world or the first world is a direct result
over over taxing the public. massive social welfare programs,powerful central banks,and
over bearing IRD,IRS ETC they are all linked to the bankers''. The bankers love the LEFT
always have they can milk the populations world over...
BAZ

jUST TO ADD THE LOONEY LEFT THE GREENS WILL IMPLEMENT MORE TAXES
WHEN SHEARER AND THE MAORI PARTY JOIN THEM NEXT ELECTION THEY WILL
FLEECE YOU FOR EVERY THING YOU HAVE. KI ORA  ALL IN THE NAME OF FAIRNESS
DOING YOUR BIT ,SAVING THE PLANET, THERES A WORLD WIDE OIL SHORTAGE
OOH WHERE RUNNING OUT OF WATER. CO2 IS KILLING ME NEVER MIND THE FACT
THAT WITHOUT C02 YOU WOULD BE DEAD.THAT REMINDS ME  PETER DUNNE the
HON MEMBER OF THE PARTY OF ONE WILL BE THERE TO COLLECT MORE TAXES
FROM THESE SCHEMES ,AND HES CENTRE RIGHT .......  HA  HA
BAZ

And too much CO2 will kill you too

Rubbish, CO2 is plant food, if there is too much in the atmosphere then people will develop an icky fungal infection.
 

Shouting odd beliefs doesn't make them rational.

The fatal flaw in kiwisaver - it's a political football kicked about by a bunch of morons.
As long as politicians can mess about with it for their own twisted agendas, it'll never be a smart place to keep your retirement savings.

I'll  have to wash my mouth out for saying this but Peter Dunne is right (this time)
1.  Your Kiwisaver contributions to be at 15%
2.  Compulsory and Universal for all.  Thats not to soak you very wise interest.co.nz readers, but to protect you from the silly people - who don't save.  Otherwise you will pay for them via your tax.
3.  No Government contribution
4.   National Super phased out as Kiwsaver cuts in.  30-40 years to elimate super.
5.   Yes.  This will cut your current disposable income.  But the alternative is savage taxation and continuing intergenerational warfare. 
6.   It's inescapable  - it's got to come from somewhere.  There are gonna be lots of years without working income and you will still have to eat.    (well ok.  You could go and hang yourself in the woodshed on your 60 birthday - if you want)