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Labour leader Phil Goff responds to the 2011 Budget - Source: ONE News
Labour will not commit to reversing changes to Working for Families and Kiwsaver announced in yesterday's Budget.
The reductions in government contributions to KiwiSaver and changes to Working for Families released in yesterday's Budget were part of an overall trimming of government spending to turn around the record level of deficit and hasten a return to surplus.
Labour has said the changes will hit middle-incomes families hard and could undermine confidence in KiwiSaver, though leader Phil Goff has refused to say if the changes would be repealed if his party was returned to power at November's election.
"I cannot say today what we are able to put back in place in the first year or the first term until we see the whole picture," he said.
Meanwhile, the government is not planning future changes to Working for Families or KiwiSaver but will continue looking for savings in other areas, Finance Minister Bill English says.
Asked if there were any areas left to trim in government spending, English said yes, but would not name specific items.
"The government is only really just now starting what households and businesses were doing two or three years ago, and that is really buckling down to tighten their expenditure, so over the next four or five years that's going to be a strong focus in the public service."
However, he said further changes to KiwiSaver and Working for Families were unlikely as the recent developments were aimed at making both schemes sustainable.
The tax on employer contributions would also stay as the exemption favoured high income earners which was not a fair use of $200m.
"There are some people who are going to be a bit upset with individual decisions, but in the long run this is about making sure that no one loses out badly if we have to make harsher decisions later. So we make reasonable and balance decisions now, the burden of that is spread across the population, it includes meeting the very large cost of the Christchurch earthquake."
The public sector has been asked to trim $330m from it spending and come up with another $650m to meet their own KiwiSaver costs. English conceded that could mean job losses but he would not speculate about how many.
New Zealand was "certainly not" going down the same road as Britain where savage cuts to public services led to riots.
"We're taking a more considered approach... giving everyone time to adjust to those changes."
Government would oversee those changes through the four-year plans departments were required to produce.
English this morning told the ANZ post-Budget breakfast he was convinced New Zealanders had got the message about saving more and would stick with it.
The government needed to follow suit and then lock in the changes so people didn't return to their old spending habits, he said.
The government has been borrowing an average $380m a week, and next year that will drop to $100m.
The partial asset sales would help reduce the government's reliance on borrowing, he said.
"Give me a choice, would I rather sell some assets to New Zealanders or borrow more off Asian central banks?"
The answer was sell shares to New Zealanders and English believed they would "lining up" to buy them.
People want somewhere to invest other than South Canterbury Finance and Hanover and "on behalf of the Government can I say, please, don't do that again". The mixed ownership model of Meridian, Genesis, Solid Energy and Mighty River will proceed from 2012 if National wins the election.
English said the government was more worried about foreign debt than foreign ownership.
Growth last year was lower than forecast but would pick up because "we are one carriage on the China, Australia train".
As the economy picked up households would start to spend more and re-enter the housing market, English said.
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