Nats consider boost to KiwiSaver

Last updated 05:00 05/10/2011

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A $300 million boost to KiwiSaver is being considered as National faces a campaign stoush over the economy.

Savings policy shot to the top of the political agenda after two of the three major ratings agencies downgraded New Zealand's credit rating last week.

Labour has promised a "bigger and better" KiwiSaver scheme.

Prime Minister John Key yesterday revealed a lower costing for a proposed auto-enrolment scheme.

Mr Key said National was putting "some final touches" on election policies, but an auto-enrolment blitz on workers not enrolled in KiwiSaver was being considered.

"That's something we'll need to make a call on," Mr Key said.

"The good news part of that is I think it would put more people into KiwiSaver. The bad news is it costs the Government up-front in the order of probably about $300m.

"There is obviously a trade-off here between being able to afford that cost and getting us back into surplus," he said.

Unusually high household debt was singled out by ratings agencies Fitch and Standard & Poor's in their downgrade statements.

Finance Minister Bill English took a barely veiled swipe at the ratings agencies, saying the Government was in charge and not them.

"We're not run by the ratings agencies," Mr English said.

"We do what we believe is the best thing for the New Zealand economy ... And they have an opinion about it," he said.

The agencies compared New Zealand's private debt unfavourably to a sharper reduction in both the United States and Britain.

However, Mr English said the decrease in debt in those countries was as a result of "fear".

Labour's finance spokesman David Cunliffe said Mr English was behaving like a "jilted suitor" by criticising the agencies after previously emphasising the importance of avoiding a downgrade.

"Instead of telling the agencies how to do their job, he should take responsibility for developing sustainable savings policies that start to reduce private debt in a meaningful way," Mr Cunliffe said.

Green Party co-leader Russel Norman said homeowners with a $300,000 mortgage could expect borrowing costs to increase by $17 per week after the ratings downgrades.

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- The Dominion Post

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