-
Source: Breakfast -
Watch Video
-
Related
Prime Minister John Key admits National will probably lose some
support with its zero Budget, but he has bet his job on it.
The big changes outlined yesterday - cuts to KiwiSaver, Working for
Families and student loans - will not take effect until after the
election.
Key wants a public mandate for a Budget that was all about cutting spending and dealing with the country's debt.
Asked on TV ONE 's Breakfast if he thinks he will lose support with the Budget, Key said: "Look, at the margins, probably a little bit."
He said National has had quite high poll ratings for a variety of reasons, including Labour's Darren Hughes scandal.
Key said the last poll on TV ONE had National at 54% support to Labour's 34% and the one before that was 49% to 34%.
"I wouldn't be surprised if we ease back a bit. I mean that's logical. Some of that sort of froth in there will come away," he said.
But Key said Labour are also going to have to put up their policy proposals and people at the election will have to decide what they want.
"But we're offering New Zealanders good economic management, a return to surpluses and lower interest rates. They know the plan."
* Jessica Mutch has more on National's election gamble, and Labour's dilemma, on ONE News at 6pm.
Finance Minister Bill English is also confident there will not be a sharp drop in people signing up for KiwiSaver after cuts to the scheme in the Budget.
The government's maximum contribution to KiwiSaver accounts as a tax credit has been halved from $20 a week, or $1040 a year. The $1000 government-funded kickstart for new accounts remains.
And increases in minimum contributions for employees and employers will both rise from 2% to 3% from April 2013 onwards.
Questioned on TVNZ today, English said the government is confident there will not be a large fall in people signing up for the scheme because it is a good deal.
"If they put in a dollar, the government puts in 50 cents and their employer puts in a dollar. And that's a lot better than putting your money in the bank," English told AMP Business.
Treasury says the changes to KiwiSaver will result in a marginal increase in national savings.
English conceded it is difficult to raise national savings and said the best contribution a government can make right now is to reduce its own borrowing.
"And it's going to drop from $380 million a week that we've been raising all of the last 12 months to an average of $100 million a week from next year. So that's some real progress," he said.
English said the good news is that New Zealanders themselves have decided to save more and the government wants that to continue.
"We want to lock in that change in behaviour because it's the biggest change in savings habits for the last 20 years and that is why we've focussed on the increased contributions to KiwiSaver. And that comes on top of tax changes last year that reduce taxation on the return to savings."
'Don't panic'
Meanwhile, the Retirement Commission says New Zealanders should hold fire when it comes to making changes to their KiwiSaver.
Retirement Commission Executive Director David Kneebone said while changes to KiwiSaver can shake people's confidence in the scheme, it's important not to become disillusioned with it.
Kneebone said the changes announced yesterday will not significantly affect the total amount people could save via KiwiSaver, and if they are currently contributing 2%, they will have two years to prepare for the 1% increase.
People need to take the time to consider their options carefully and think about their own individual circumstances, rather than be panicked by changes to the scheme, he said.
"The fundamentals of KiwiSaver are still positive, because of the government and employer contributions," Kneebone said.
He added that ideally KiwiSaver would be left untouched for a long period so public confidence in the scheme is not eroded.
'Lacks courage'
The Budget was attacked in the House, with the Greens saying it "lacks courage", while out on the street the EPMU said it does nothing for working families.
Opposition leader Phil Goff agreed on both parts, saying there is nothing innovative or transformative in the Budget that will address New Zealand's economic problems of high debt, low wages, low productivity, high unemployment and poor economic growth.
But English said today the government did not set out to call the Budget transformative and there is not a single transformative idea for the economy from Labour.
He said the Budget was about getting the government's finances under control and increasing national savings at the same time as paying the very large costs of reconstructing Christchurch.
"And we've got I think a balanced and responsible set of decisions that achieve that. And we've got some early payoff for that - the reassurance that the credit rating agencies have indicated that they'll maintain New Zealand's credit rating.
"That's good news for all those New Zealanders who are concerned about their interest rates, which is one of the biggest components of their cost of living. And it means interest rates will be lower for longer."
Goff also criticised projections for almost no-change to private and public debt as a percentage of GDP by 2015, but English hit back.
"It's a bit rich coming from Phil Goff because under the last Labour government in the last decade our overseas debt ballooned to the point where we now owe $170 billion to foreign lenders. What has happened is that has flattened off. So the growth has stopped." English said.
He said the growth in debt has flattened off because households are making the choice not to borrow more money.
Labour's plan
However Labour's finance spokesperson David Cunliffe is keeping pressure on the government, saying what his party would do if it wins the November election.
Cunliffe told Breakfast today that Labour would look at boosting New Zealand's growth and building up national savings, including a plan that focuses more on small and medium businesses.
"The foundation of it will be to get growth up in a sustainable way," he said.
This would rely on economic development, monetary policy reform, more effort on innovation, a better plan for small and medium size enterprise development and more effort on skills development, he said.
"Even Business New Zealand, for goodness sake, has criticised
the government for being absent without leave on those
issues."
Labour would also build up national savings.
"The big difference between the Aussie economy and ours is that they have a real savings plan. And just cutting KiwiSaver, breaking an election promise, to do it, is no substitute for that," Cunliffe said.
What do you think of the Budget? Have your say on our messageboard below.
Latest NZ News Video
-
ONE News Minute 9am update: May 26 (1:00)
-
Kids cough up $14m for Government (1:50)
-
Education ministry 'barbaric' (1:55)
Add a Comment:
Post new commentchrisinus said on 2011-06-06 @ 10:28 NZDT: Report abusive post
Most of the students who are overseas are there because they're having problems living in NZ with low salaries and very high taxes but rip-off costs of living. If you want to keep them here, NZ needs to increase salaries and taxes to match those in Australia and UK. Then they would continue to pay their loans and new laws wouldn't be necessary. KEEP UP WITH THE WORLD, NZ!!!
JayKay22 said on 2011-05-21 @ 21:12 NZDT: Report abusive post
Why take away all course related costs for part-time students - why not simply halve it instead - make the entitlement $500 instead of $1000. That makes far more sense.
pioneer said on 2011-05-20 @ 12:04 NZDT: Report abusive post
TO MANY FAMILIES WANT HAND OUTS. THE FAMILY ON TELEVISION LAST NIGHT HAD 5 CHILDREN AND A DOG THE CHILDREN WERE OLD ENOUGH FOR THE MOTHER TO GET A JOB PLUS SHE HAD SPENT MONEY ON A STUPID TATTOO IF YOU CAN'T AFFORD CHILDREN DON'T BREED AND EXPECT THE COUNTRY TO BORROW FROM CHINA AND jAPAN FOR THEM. WE HAD 3 CHILDREN I WORKED AT NIGHT AND IN THE WEEKEND WHILE THEY WERE BABIES UNTIL THEY WENT TO SCHOOL THEN WORKED PARTIME 1 IS A SOLICITOR,2 A CEO IN AUS,3 BUSINESS MANAGER
big2al said on 2011-05-20 @ 09:06 NZDT: Report abusive post
As usual with a Nat govt, the only ideas they can come up with are selling the family jewels (SOE's) which we already know is only a short term gain & a long term loss (NZ Rail) and cutting public services. A billion dollars lol, where do they think the money is coming from? Essential services & jobs will be cut, which will lead to more spending pressure on WINZ as more unemployment benefits are paid. No matter how this Govt cleans it up, it is the poor & middle income earners who suffer.
smithy said on 2011-05-20 @ 07:48 NZDT: Report abusive post
It may lack flair and inspiration but I think it is a very sensible budget given the economic climate. I dread to think where we would be with Labour in charge who have not yet made a valid argument on any subject