Kiwisaver positive start but more needed: NZI

But David Skilling, chief executive of independent think tank the New Zealand Institute, said much more needed to be done in the next few years if the country was serious about addressing its serious social and economic challenges.

The budget announcement had been a modest start after many years in which governments had taken a hands-off approach to personal savings and asset ownership, he said.

The Government policy, called the Securing Your Future package, includes a work-based savings scheme called KiwiSaver, which also offers help to first home buyers.

The Government would start each person's KiwiSaver account with a $1000 contribution.

It would also provide between $3000 and $5000 for KiwiSaver members, who met requirements, to buy their first home.

Under the New Zealand Institute proposal, every child would get an account with $500 at birth and the same amount at five and 10 years.

The Government would match voluntary savings up to $200 a year so there should be $14,000 in the account at 18 years.

Withdrawals could only be made for tertiary education, a first home or to put into a pension.

A two percentage point across the board reduction in the personal tax rate would be diverted into individuals' savings accounts.

Additional savings up to $1000 a year would be matched dollar for dollar for those on the lowest tax bracket and 50c per dollar for others.

Dr Skilling said he thought the Government's scheme would make a positive difference, but the question was whether that would be enough to make a material dent in the economic and social issues facing the country.

With its current fiscal position New Zealand had a wonderful window of opportunity now to tackle those issues and he had been disappointed the Government had not done more.

"We think over the next several budgets this ought to be an on-going priority," he said.

The budget announcement had moved the government from doing nothing to doing something to encourage savings and asset ownership, overcoming the powerful force of policy inertia.

The Engineering, Printing and Manufacturing Union (EPMU) said it welcomed the KiwiSaver scheme.

But the minimum contribution level of four percent would put it out of the reach of low-income earners, national secretary Andrew Little said.

The EPMU would be making submissions to the Government about the minimum contribution level and on the issue of employer contributions.

Commenting is closed