Bill English

Wellington, May 4 NZPA - Tax and superannuation reforms announced in Australia at the weekend were made under circumstances unique to that country and changes on the agenda here will be made with a different set of objectives, says Finance Minister Bill English.

Changes made in Australia in response to the Henry Review include a 40 percent tax on big miners' profits, a rise in compulsory employer superannuation contributions to 12 percent from the current 9 percent by 2019, and a gradual cut in the corporate tax rate from 30 to 28 percent.

New Zealand's corporate tax rate is 30 percent and compulsory superannuation contributions stand at 2 percent.

The adjustments in Australia sparked comments from commentators here that it could give yet another incentive for New Zealanders to head across the Tasman and capitalise on comparatively generous superannuation schemes.

Council of Trade Unions economist Bill Rosenberg said the Australian superannuation move would attract more New Zealand workers to Australia and boost funds for investment in its economy.

Financial commentator Bernard Hickey said the change had "turbo charged" Australia's superannuation scheme, which was already popular among New Zealand workers there, as many wouldn't have savings working in New Zealand.

He told The New Zealand Herald the increase would also spark debate about whether KiwiSaver should be compulsory.

Business New Zealand chief executive Phil O'Reilly said dropping the Australian corporate tax rate 2 percent over four years was a modest reduction and matching it here "should be relatively achievable for us".

Mr English said New Zealand's tax package was put together to suit the needs of its economy and there were different objectives.

"They're dealing with their resources boom, we're trying to rebalance our economy to get stronger exports and savings and investment, and so you'll just have to wait and see in the budget what decisions we were able to make," Mr English said.

"The Australian package was always going to be conditioned by the fact that it's election year and they've taken a fairly political view of the Henry Review that suits their circumstances. We're running ours, generally we need to maintain competitiveness with Australia, but in our view the more important area at the moment is going to be to compete for talent and to compete for New Zealanders who will be looking across the Tasman at an economy that's been growing pretty strongly and weighing up their opportunities there.

"So we need to make sure that we've got well rewarded opportunities here," Mr English said.

The Australian Chamber of Commerce said the increase in compulsory super contributions would be costly for many small businesses, despite the slight drop in the corporate tax rate, and likely to force employers to cut wages or lay staff off.