Key wrong on KiwiSaver

Finance Minister Michael Cullen said Opposition leader John Key has deliberately exaggerated the net cost to employers of KiwiSaver.

"In Parliament today he did a back-of-the-envelope calculation offsetting the benefit of the business tax package that is simply incorrect," said Dr Cullen.

"He has ignored the employer tax credit and used the wrong basis for his claims – 2 million workers, when there are 1.346 million equivalent full time workers. He has also failed to take into account the fact that employers will be able to offset their compulsory contributions against wage/salary negotiations.

"The net annual cost of the employer contribution after full implementation is $1.346 billion (cost of the employer contribution) minus $674 million (the credit offsetting the employer contribution) which equals $672 million.

"If there is a 0.5 per cent moderation in total wage growth over the next four years in total, it would reduce the net cost to just over $300 million.

"What he has done is he has exaggerated the cost of KiwiSaver and ignored the change in incentives towards saving and investing that will bring wider advantages to the New Zealand economy as outlined by NZX.

"NZX CEO Mark Weldon said 'the matching tax credits for employer contributions will give businesses a competitive edge in attracting and retaining high value employees.

'There's no doubt we're swimming in a global talent pool. Now employers will be able to contribute to their employees' savings in a low-cost, tax-efficient way, adding a degree of flexibility to structuring pay packages that will help them attract and keep the best people.'"

"What Mr Key did in the House today was ripping up his speech as he went along because that is exactly what it was, rubbish."

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