Cullen quizzed on KiwiSaver

Finance minister Michael Cullen answers questions in Parliament about KiwiSaver.

Thursday, June 9th 2005, 4:48PM

MARK PECK (Labour—Invercargill) to the Minister of Finance: Has he received any overseas expert reports on the Government’s KiwiSaver scheme?

Hon Dr MICHAEL CULLEN (Minister of Finance): Yes. The prestigious London-based Pensions Policy Institute has praised the scheme and said that it has many design features that could be useful in Britain. That follows the World Bank report last month, recommending a multi-pillar approach to pension provision—all pillars that are reflected in the policy framework introduced under this Government.

Mark Peck: What features of KiwiSaver were identified by the Pensions Policy Institute as appealing, and what might threaten these in New Zealand?

Hon Dr MICHAEL CULLEN: The automatic enrolment, the flat-rate $1,000 Government incentive, the low administrative cost, the holistic approach to saving, and the help towards first home ownership are all identified by the institute as being good design features. The biggest threat, of course, would be a National Government, as National has refused to back the scheme and said, in any case, that it would certainly dump the $1,000 Government contribution.

John Key: Why does the State sector retirement scheme not comply with the KiwiSaver vehicle, and does he intend to rectify the State sector retirement scheme so that it does?

Hon Dr MICHAEL CULLEN: I anticipate that during our third term the State sector scheme will be brought up to the level to qualify it for exemption within the KiwiSaver scheme. Of course, if National were elected, the KiwiSaver scheme would go down the tubes to pay for tax cuts.

Craig McNair: Does the Government have any intention of raising the KiwiSaver scheme to a more realistic level of assistance, instead of the very small amount proposed at present?

Hon Dr MICHAEL CULLEN: Maybe the member has been too long in this House. For many modest-income New Zealanders, a $1,000 upfront contribution is actually quite a lot.

Gordon Copeland: Has he received any overseas reports on the Child Trust Fund set up by Labour in the UK, an incentivised savings scheme designed not only to make tertiary education more affordable but also to enable young adults to use the funds to buy a house or start a business; if so, why will he not open up the proposed tertiary savings scheme to those alternatives and align it to the KiwiSaver scheme—a cradle to the grave savings scheme?

Hon Dr MICHAEL CULLEN: Yes, I have. The problem is that in terms of the proposed tertiary education scheme, we are looking for an equity element and a public contribution element, which will enable us to spread the resources more fairly. The KiwiSaver scheme is about people saving for their own future, not for anybody else’s.