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Kiwisaver Contributions Will Stay Under National

Fuseworks Media
Fuseworks Media

A slip-up by a National backbencher has forced the party to reveal it will keep compulsory employer contributions to Kiwisaver.

National has for months been refusing to say whether it would keep the extended Kiwisaver scheme which came into force in April and includes compulsory employer contributions with a government tax credit to subsidise employers for making the payments.

But National leader John Key was yesterday forced to announce it would keep compulsory employer contributions after one of his backbenchers said it wouldn't, and then revealed it would.

"We haven't finalised our Kiwisaver programme yet, but there will be compulsory employer contributions," Mr Key told reporters.

"These are likely to be at pretty similar levels to what is outlined in the legislation at this point."

This would be backed by continuing government subsidies, he said.

Mr Key confirmed the policy only after National's industrial relations spokeswoman Kate Wilkinson indicated to a forum of human resource managers that rumours National would scrap the contributions were correct.

She told the business audience that compulsory employer contributions were not party policy.

Ms Wilkinson then said in a statement she misinterpreted the question, and said; "National will release its KiwiSaver policy later this year, but suggestions that National will do away with compulsory employer contributions to the scheme are incorrect," she said.

Cabinet Minister Trevor Mallard, who was at the forum and whose account of events was confirmed by others there, said there was no doubt Ms Wilkinson understood the question was about compulsory employer contributions and rumours that National would scrap it.

"She said -- and I quote -- `the National Party is not a party of compulsion'."

People listening took Ms Wilkinson's comment to mean National would scrap compulsory employer contributions.

Mr Key said his MP had not been involved in the policy design and her initial comments were incorrect.

However, he indicated her later statement was right.

He was frustrated his MP had got it wrong, but everyone made mistakes.

Finance Minister Michael Cullen said he believed National wanted to scrap the contributions to free up more than $2 billion over four years for tax cuts.

The employer contribution is offset by a tax credit from the Government of up to $20 per week.

To a person on the average wage of $45,000 a year, the employer contribution would be worth $1800 a year from the fourth year of the scheme operating and this would be offset by an annual $1040 tax credit.

There has been a large increase in the number of people signing up to KiwiSaver since the extra contributions came into force, with more than 600,000 now enrolled.

Asked if he welcomed National backing one of his centrepiece policies, Dr Cullen said he did not believe them.

When pressed by the media yesterday afternoon, Mr Key would only say a National government would support compulsion at "pretty similar" levels to now, Dr Cullen said.

"It is not clear whether this means `now' as in the 1 percent contribution required from 1 April this year or the 4 percent that will be required from 1 April, 2011."

He called on National to clarify whether it would keep:

* The $1000 taxpayer kick start;

* The government contribution of up to $1040 a year;

* The full employer tax credit;

* The full support for first home buyers.

National earlier backed KiwiSaver as it was first introduced, but expressed scepticism about the "turbocharged" version.

Last May, National's deputy leader Bill English said he was concerned about the compulsory employer contributions. "I think particularly small businesses felt ambushed by the compulsory contributions," he said.

In March this year, Mr English said National would keep some form of government subsidy for people taking part in KiwiSaver but said it was not releasing its policy until closer to the election.

Mr Key told TV3 this morning that National would choose when it would release details of its KiwiSaver policy and would not be pushed into it early by yesterday's events.

He was asked if National would retain $2.4b government subsidy, and whether employer contributions would be lower.

"You need to see our policy when we roll it out in detailed form."

Mr Key said the party had not "completed the work around KiwiSaver" but was "pretty close" to doing so.

Mr Key said Ms Wilkinson made her comment "out of ignorance rather than out of inside information".

"She was really making the point as a general rule National doesn't like compulsion...I think backbench MPs and MPs generally sometimes try and answer questions when they would be better to say it's not my area of specialisation."

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