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Cunliffe: National on savings: Rhetoric versus reality

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Fuseworks Media
Fuseworks Media

National's rhetoric is not matched by the reality of continuing cuts to KiwiSaver, says Labour's Finance spokesperson David Cunliffe.

"Media have today foreshadowed budget moves to cut the KiwiSaver Members Tax Credit and to force government agencies to fund their own employer contributions through baseline savings," David Cunliffe said. "Bill English hasn't denied these moves, and may even have leaked them himself.

"Short-sighted penny-pinching is no substitute for a real plan to lift savings rates," David Cunliffe said.

"New Zealand's lack of savings drives our critical international debt problem. Total international debt is around 85 per cent of our entire GDP. Around 90 per cent of that debt is not government debt, but private debt due to excessive borrowing and low savings.

"Lifting private savings is therefore crucial if we are going to get out of the international debt trap and build a better future for all Kiwis," David Cunliffe said.

"National's rhetoric is that savings will be the centrepiece of Budget 2011. Unfortunately for all Kiwis the rhetoric doesn't match reality. Today's leaked news --- whether leaked by National or not --- of further KiwiSaver cuts only confirms National does not have a coherent savings plan.

"National has already weakened incentives to save through KiwiSaver by cutting employer contributions from 4 per cent to 2 per cent and by reducing the default contribution rate from 4 per cent to 2 per cent," David Cunliffe said. "National has also deferred contributions for a decade to our high-performing Super Fund.

"For National to have any credibility on savings, Mr English will have to announce other savings measures in Budget 2011, such as indexing savings tax for inflation or a lower rate of tax for savings income," David Cunliffe said. "Measures of this sort will, however, disproportionately benefit wealthy Kiwis who already have more ability to save. They are also fiscally expensive relative to the additional savings generated.

"Labour believes that lifting New Zealanders' savings is crucial to our future. We will continue to lead the savings debate as we did when we established KiwiSaver. We will carefully analyse measures Mr English announces before releasing any detail of future Labour policy."

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