Budget 2016: No hints at KiwiSaver auto-enrol plan

Finance Minister Bill English is giving no hints as to whether he will introduce auto-enrolment into KiwiSaver soon, despite saying forecast surpluses for the years ahead provided a chance to "save for the future."

Speaking as he watched his eighth Budget roll off the printing presses, Mr English described the Budget as "pretty solid" including surpluses which meant over the next three to five years, New Zealand would have choices other countries did not have.

He said if those surpluses were not squandered "then we can improve spending, save for the future, and pay off debt."

Pressed later on whether he was talking about auto-enrolment of Kiwisaver, Mr English said hinted there might be something related to KiwiSaver in the Budget but that was "not necessarily" autoenrolment.

"We're just making the point if you've got surpluses you've got choices. We don't want to get ahead of ourselves, we're only just getting to consolidated surpluses. That doesn't mean we can have a big spend up."

Mr English had shelved plans to introduce auto-enrolment of KiwiSaver because of the cost. However after last year's Budget Mr English said the Government would re-evaluate it because scrapping the $1000 kickstart payment would make it much cheaper. Auto-enrolment would mean everybody was automatically enrolled in the scheme, but could opt out. Currently people are automatically enrolled when they start a new job.

Mr English was coy about when he would re-start contributions to the Super Fund, which have been on hold since 2009. Mr English said at the time it did not make sense to keep paying when the Government was borrowing to pay for the fallout from the Global Financial Crisis and the Canterbury earthquakes. The Fund was set up by former Labour Finance Minister Michael Cullen to help pay for the cost of superannuation as the population aged.

Labour's finance spokesman Grant Robertson said re-starting payments into the Super Fund would be a priority for Labour - well ahead of any tax cut programme. He criticised Prime Minister John Key for raising the prospect of a $3 billion package of tax cuts after 2017, saying a very large surplus would be needed to justify such a package. Mr Robertson said Labour intended to set out an interim package of tax measures before the 2017 campaign to pay for its promises in health, education and housing and would do a thorough review of tax if it got into Government.

Mr Key said he was not surprised to hear Labour intended to raise some taxes. "I don't think it will come as breaking news to anybody that Labour are campaigning on raising taxes and spending more money." He said the $3 billion figure he used was based on National's 2010 tax cut package which had included changes to Working for Families as well as drops in tax rates and came to about $3.6 billion. The Government increased GST from 12.5 to 15 per cent to pay for that. Mr Key said it was "not our intention" to raise GST again to pay for tax cuts. "But if we were doing anything we will go and campaign on things."

Mr English has also set a goal of repaying debt down to 20 per cent of GDP by 2020, down from about 25 per cent now. Last week he announced the Government had abandoned plans for modest tax cuts in favour of repaying debt and putting more money into health and education as New Zealand struggled to cope with a population spike.