Govt halves contribution to workers' KiwiSavers; employers get tax cuts
Over the next four years, Finance Minister Nicola Willis has cut a handy $2.5 billion (roughly $620 million a year) in spending by halving the Government contribution to 0.25 percent, and stopping any contribution to high-income earners.
For most workers, this will work out as a reduction of nearly $261 a year – swallowing up round about a third of any tax cuts they received last year.
Willis defends this – she says officials recommended removing the Government contribution entirely. 'But it's my view that keeping a bit of a contribution is a little bit of juice, that means that some people, who might not otherwise contribute, will.'
At the same time, the default employee contribution, matched by their employer, will rise to 3.5 percent, and then 4 percent.
This means most workers should put away more savings – but the changes set up an arm-wrestle between employers and their staff.
Willis admits as much in her speech to Parliament: 'The Government recognises that, over time, employer contributions may effectively form part of the wage negotiation process.'
Core Crown expenses to rise in nominal terms, drop in real terms
She expects the KiwiSaver changes to slightly slow wage growth, but that will be outweighed by the benefits to business and their employees from an average $1.7b a year Investment Boost tax incentive scheme, also announced today.
Willis is not concerned that workers on low incomes might be more reluctant to maintain payments, without the Government contribution. 'The advice we received from our officials was that there is actually very little evidence that the size of the contribution influences people's decisions to go in KiwiSaver. The most influential thing is the auto enrolment and then the auto contributions.'
Already, many employers hire new staff on total remuneration packages; that is, the employee pays both their contribution and their employer's out of a total gross salary package. This means that if they want to increase their contribution to the new higher default, their contracts may require them to pay the additional employer contribution as well, all from the same gross salary.
Willis tells me the Government needs to do more work on how this will pan out. It has until April next year to figure out how the changes will be implemented, and how employers will behave.
The Government has 'very poor data' on how widespread total remuneration packages have become, and who will pay the increased employer contribution in such cases. 'That will be for employers and employees to resolve as part of their wage bargaining on a case-by-case basis,' she says.
Willis tells me she went back and read former Labour finance minister Michael Cullen's speeches about KiwiSaver, when the policy was introduced.
'At that time, he fully acknowledged that, yes, employers would meet these costs in different ways, but ultimately, the benefit for greater savings both for individual New Zealanders, for our businesses and for our economy would stack up.
'And I don't agree with Michael Cullen on everything, but I agree with him on that.'
Employers and Manufacturers Association strategy head Alan McDonald, who was in the Budget lockup with media, says the association will encourage bosses to act in good faith in pay negotiations.
He believes most will be happy to contribute the extra percentage point, because it will be good for their workers and good for the economy. 'Ultimately, most employers are good people,' he says.
But Council of Trade Unions economist Craig Renney isn't so sure. 'As Einstein said, the most powerful force in the galaxy isn't gravity, it's compound interest. And if you are taking away contributions, however small, from low-income households with the power of compound interest you're also taking away their future savings.'
He says that with the changes to pay equity, the repeal of fair pay agreements, the loss of the living wage guarantee, and now this, workers feel like they're under assault. 'I think
they've got every right to feel battered.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scoop
44 minutes ago
- Scoop
Calls By Jewish Council For Censorship Will Backfire
In response to the Australian Parliamentary Inquiry into Antisemitism in Universities that recently recommended limiting particular speech, the New Zealand Jewish Council has called for similar action by the New Zealand Government. But threatening to silence speech, as odious as some may find it, would set a dangerous precedent and be a terrible own goal for the Jewish community, says Dane Giraud, Council member of the Free Speech Union. "Objectively, the last 18 months have witnessed an intense rise in antisemitic actions around the world, not least of all in Australia and New Zealand. Some of these actions have been unlawful and unacceptable. However, conflating such actions with the speech and opinions of individuals (such as students on university campuses) will not make a single Jew (or any Kiwi) safer. 'Calls by the New Zealand Jewish Council for our Government to implement similar recommendations such as stricter enforcement of 'hate speech' laws and removing funding from universities for failing to act against certain perspectives, is overreach and risks setting a terrifying precedent. It will affirm many conspiracies in certain people's minds that will inevitably result in greater antagonism against our (Jewish) community. 'As we've seen abroad, anyone who defies such bans can become a martyr or even cult hero. Censorship is a gift that can elevate the once obscure. Free speech is still our best tool with which to combat bigotry. There are no shortcuts here. We need to change the conversation, not crush it. 'A better response to any incredibly fraught issue is to facilitate wider conversations, encourage greater engagement between communities, and increase a focus on education. There are some terrible ideas out there, spread by very questionable people, but silencing them will only push this grievance underground, where it festers, and where it becomes much harder for people to diagnose and respond appropriately. 'Expose it to sunlight. Allow them their voice and ensure that those who wish to respond also have theirs. Bad (and hateful and vile) ideas are beaten by better ideas, not threats of funding removal and censorship.'
Otago Daily Times
2 hours ago
- Otago Daily Times
Good and funny, if not definitive
REVIEWED BY MIKE HOULAHAN As anyone who has taken even a passing glance at the pages of the Otago Daily Times this week cannot have failed to notice, former prime minister Dame Jacinda Ardern has a book out. Even more glaringly obvious is that New Zealand's 40th prime minister, a woman once hailed as the great unifier, still polarises people like few leaders this country have done. The letters page has mixed hagiography and vitriol; social media has been all afrenzy. What has somehow been lost in the heat and fire is that all this furore is about a book - and amidst a blizzard of commentary there is very little as to whether it is actually a decent read or not. Well, for a start, of the three books on, or by, Jacinda Ardern that I've reviewed - and the fact that that makes her by far the most such scrutinised New Zealand prime minister speaks volumes - this is by far and away the best. That should come as no surprise. One was a foreign-authored cut-and-paste job with dubious ''co-operation'' from its subject, while the other, while well-written, was as much about the author as its subject. I don't know if she had a helpful ghost writer but speaking as someone who has met Ardern several times, it certainly reads like her authentic voice. This is the woman who always got a touch grumpy when - as I have with every PM I have had professional dealings with - I insisted on calling her ''prime minister'' rather than ''Jacinda''... but who equally, and unfailingly, always asked about the health of our children. She actually does go out of her way to be likeable, engaging and - yes - kind, and it has always felt genuine and never forced. She has always been a pleasant, interested and interesting conversationalist, and A Different Kind Of Power often feels like its author is telling you a story over a cup of tea or a single malt. This is most apparent in the opening third of the book, in which Ardern describes her childhood and upbringing - by turns rose-coloured or tinged with sadness as events unfolded. Perhaps because it is the least controversial part of Ardern's story, the bit she feels most relaxed and least self-analytical about, it is also the most entertaining. The second part of the book describes Ardern's unlikely entry to Parliament, followed by her even less likely ascent to the leadership of the Labour party. She skirts through these years carefully, trying hard not to offend anyone - again, typical behaviour, as A Different Kind Of Power often demonstrates. That said, former leader David Cunliffe does not come out of things at all well. Someone who does emerge in shining red colours, however, is South Dunedin's favourite son, Grant Robertson, who - after the main hero, Ardern's partner Clarke Gayford - is in contention with Ardern's father Ross for being the best supporting actor of this story. The third part of the book, the Ardern prime ministership, is a mixed bag. The best bits are terrific: her insider's account of March 15 is electrifying, her rundown of the early days of Covid-19 are compelling. Those two events, unsurprisingly, dominate this part of the book. Many of the major political events of her time are either skirted over or nor addressed at all. This is no doubt due to the expected international audience for A Different Kind Of Power - readers in Manchester or Massachusetts are unlikely to care much about the Provincial Growth Fund, child poverty reduction targets or Kiwi Build. But it also means that the definitive account of Jacinda Ardern's time as prime minister still waits to be written. Overall, despite its shortcomings, this is a good and often very funny read about a fascinating figure and contains many interesting insights. The sad thing about that sentence is that even that faint praise is going to see my email inbox clog up with vitriolic emails - and I know this because that exact thing has happened, despite my commentary being as neutral and even as possible, almost every time I have written about Ardern. There is definitely a book still to be written which explores that subject. Mike Houlahan is the ODT political editor
Scoop
2 hours ago
- Scoop
Africa-Asia Dialogue On Agrifood Systems Transformation To Open In Viet Nam
Hanoi - Agriculture ministers and top-level policymakers from 15 African countries will meet with their counterparts from 3 Asian countries here on 15 July 2025 to discuss making agrifood production efficient, resilient, sustainable and inclusive, to reduce high levels of hunger, malnutrition and poverty in both regions. The High-Level Inter-regional Knowledge Exchange on One Country One Priority Product (OCOP) Models, co-organized by the Government of Viet Nam and the Food and Agriculture Organization of the United Nations (FAO), is the first intercontinental dialogue on agrifood systems transformation, guided by the FAO 'Four Betters' vision – Better Production, Better Nutrition, Better Environment and Better Life, leaving no one behind. The dialogue is an initiative of FAO Director-General QU Dongyu to familiarize developing countries in Africa with Viet Nam's success in agrifood systems transformation, which is helping reduce wide urban-rural economic disparities in the Southeast Asian nation. The event includes an exchange of national experiences in implementing FAO's flagship One Country One Priority Product (OCOP) initiative, which was launched in 2021 to promote sustainable value chains of nutritious, but underutilized, special agricultural products with unique geographical and cultural traits. 'We look forward to this exchange of knowledge and ideas, and to learn together how to transform agrifood systems for the benefit of all,' said Alue Dohong, Assistant Director-General and FAO Regional Representative for Asia and the Pacific, in a video message ahead of the event. Ministers and top agriculture officials from Bhutan, Cameroon, Cote d'Ivoire, Democratic Republic of the Congo, Gabon, Ghana, Ethiopia, Lesotho, Malawi, Mozambique, Nepal, Sierra Leone, South Sudan, Tunisia, Viet Nam, Zambia and Zimbabwe, will share national perspectives on promoting the Four Betters through the OCOP initiative. Producing more food with less inputs, making agriculture climate-resilient, sustainable and profitable for all, is critical for both Africa and Asia and the Pacific, the regions with the world's highest levels of hunger, malnutrition and poverty. Viet Nam's agrifood transformation model The inter-regional knowledge exchange will begin with a briefing on Viet Nam's transformative One Commune One Product programme, a cornerstone of the country's rural economic development strategy, and an inspiration for FAO's OCOP initiative. Launched nationwide in 2018, it has significantly increased rural incomes and jobs by developing sustainable value chains for local specialties and traditional products. The programme provides comprehensive support for capacity building, product development, quality management and market access, to the rural manufacturers of these special products. The OCOP Four Betters Models The agriculture ministers from Africa will also be briefed on how FAO is leveraging science and innovation to accelerate agrifood systems transformation through OCOP implementation in the Asia-Pacific region, in support of the Four Betters. Strategic partnerships with leading science and innovation centres in the region are enhancing value chains of special agricultural products (SAPs) identified by member countries under the OCOP initiative. This includes the application of an innovative geographical and environmental traceability tool that will increase access of SAPs to high-end markets and incentivize sustainable production. Nutrition science and technology is also being used for SAPs-based food product development, suited to different age groups and tastes. In addition, OCOP implementation is supporting Asia-Pacific countries with market intelligence to integrate SAPs into national, regional and international markets. Strengthening the FAO-Viet Nam partnership The 'High-Level Inter-regional Knowledge Exchange on One Country One Priority Product (OCOP) Models' further cements the FAO-Viet Nam partnership, anchored in Viet Nam's active role in the FAO South-South and Triangular Cooperation (SSTC) framework. This was reaffirmed by the signing during the FAO Director-General's visit to Hanoi in February 2025, of an FAO-Viet Nam Memorandum of Understanding, to promote the sharing of technical knowhow, institutional and policy experiences under the SSTC framework.
