"A change in take-home pay is highly personal. For low-income earners in particular the fact that they will get the money back in several decades' time will be to all intents and purposes irrelevant."
Labour's finance spokesman David Parker said the variable savings rate would both rise and fall in the course of an economic cycle and as for the impact on the low-paid, "We are proposing increases to the minimum wage, and a living wage, and we would have to check that that would be more than enough to compensate people for the additional savings."
Westpac chief economist Dominick Stephens said: "It can't hurt but it may not do much. Compulsory KiwiSaver should increase national savings and reduce interest rates but only a little bit."
Extrapolating from estimates the Savings Working Group did on the effects of a compulsory workplace savings scheme on household savings overall, Stephens' preliminary estimate of the new household savings from Labour's proposal would be around 0.6 per cent of GDP. "That is not nearly enough to close a current account deficit of 3 to 4 per cent of GDP. Australia has a big compulsory savings scheme and a current account deficit similar to ours."
But Stephens was more positive about what was not in the policy.
"I'm very heartened to see a Labour Party which is committed to 2 per cent inflation and an independent central bank. They have quietly dropped the [idea of the] board making the interest rate decisions. They have dropped any suggestion of go-slow monetary policy ..."
Bank of New Zealand head of research Stephen Toplis said: "There is no question that to reduce the current account deficit we have to increase the national (not just household) savings rate. The problem is how do you do that. I'm not entirely convinced that compulsion does it, or that having the ability to move the contribution rate over the economic cycle would be particularly effective."
Like interest rates it would be a very blunt tool, Toplis said.
At the time in the cycle when the Reserve Bank would be leaning against inflation pressures, those on low incomes should be facing a higher cost of living already and to the extent it reduced the exchange rate it would increase the cost of imported goods, while most would likely be renting so that they would not benefit so much from lower interest rates.
Deutsche Bank chief economist Darren Gibbs said he was "kind of sceptical it would have much of an impact".
For those who could afford to save more than the KiwiSaver minimum it might only have the effect of switching from one form of savings to another. And to the extent those on lower incomes were exempted it would reduce the impact on consumption and the ability of the Reserve Bank to go easier on interest rates.
There was "zero" market reaction, he said, partly because of doubts there will be a change of government in September, but also because the lags in implementing the policy put it beyond the time horizon relevant in dealing rooms.
