KEY POINTS:
Our experts give their instant analysis of Michael Cullen's eighth Budget
Fran O'Sullivan, business commentator
Michael Cullen's taken the first giant step towards the imposition of compulsory superannuation in New Zealand.
It won't take many years before employers tire of the frank uncertainties involved in calculating just how much they will be forced to contribute to Kiwisaver and suggest a formal trade-off around wage levels.
Right now there is no compulsion on employees to tuck their own savings into the scheme – just the carrot of the Government tax break, and, the knowledge that they can force their employer to dip into his/her pocket and ultimately match their own minimum four per cent contribution to the scheme after a four year phase-in period.
Cullen has offered employers a matching tax credit of up to $20 per week per employee to offset the cost to them of having to make super contributions on top of the normal wage or salary package.
But it will be a nightmare to administer - particularly for small businesses that struggle on cost projections.
Park that - the bigger picture is the Budget will incentivise more New Zealanders to join KiwiSaver to "bank a tax cut."
The upside is that New Zealand's savings pool will increase and, as the size of funds under management increases, we will get a mind shift towards a share-holder society that Australians enjoy.
Many Zealanders would rather have had tax cuts - but as savings grow the grumbles will decrease.
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John Armstrong, political correspondent
Save it - or lose it.
That is the blunt choice offered by Michael Cullen's eighth Budget.
In fact, it is not much of a choice at all.
The Minister of Finance's expanded KiwiSaver scheme may not be compulsory superannuation in name.
But it is the next best thing.
An enticing $40-a-week tax credit carrot is being dangled in front of wage and salary earners. They would be stupid not to grab it. To get it, however, they must start saving themselves. And even then they still don't get it until they are 65 when their KiwiSaver nest-egg finally matures.
They may be saving already and might prefer the money as cash in hand now. They may not be saving because they need the cash in hand now.
They may therefore be feeling grumpy that Dr Cullen is dragging them to the superannuation well and forcing them to drink.
That feeling would have been partly offset by Dr Cullen following through with so-called "chewing gum" tax cut --- the proposed lifting of income thresholds at which middle and top personal tax rates cut in and which was supposed to happen next year.
However, fearful of doing anything which might provoke Reserve Bank governor Alan Bollard to hike interest rates again, he has not even proceeded with that paltry offering.
So careful is the Budget in avoiding doing anything which might open the Government to accusations of stoking inflation, it might have been ghost-written by Dr Bollard.
In the long-term, the additions to KiwiSaver will cement Dr Cullen's deserved place in New Zealand history as the finance minister who addressed New Zealand's abysmal savings record and avoided a crisis in pension payments brought on by an ageing population.
However, the expanded KiwiSaver also has the short-term benefit of extracting more than a $1 billion from an overheating economy.
LIke those signing up for to the scheme, Dr Cullen really had no choice either.
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Audrey Young, political editor
Michael Cullen has made an offer to workers that will be hard to refuse.
He has made an offer to employers that will be impossible to refuse.
You can hear the howling already from them around what amounts to half a compulsory superannuation scheme.
They must pay if an employee opts to join the Kiwisaver scheme.
The Finance Minister has tried to ease their protest by phasing in the required rate of payments over four years and giving them a subsidy of up to $20 per employee.
But it will inevitably seen by employers as giving with one hand (a cut in the business tax rate from 33c to 30c) and taking away with the other.
The most obvious way for employers to fund the compulsory payment will be in foregoing pay rises.
Whether low-income workers will feel able to commit the minimum four per cent of their pay to the scheme has been questionable since the scheme - to begin in July - was announced two years ago.
The level of resentment if they can't may have just doubled through this Budget.
The unions were clearly signed up to this approach before the Budget.
Whether workers themselves will agree to give up pay increases today for locked in retirement funds tomorrow is not yet certain.
Complicating it will be collective bargaining by unions in which some members of the collective have opted in to Kiwisavers and some have not.
Workers and companies that already run generous schemes will be wondering whether they should become a compliant scheme.
But all these will be seen as minor points to be ironed out in Dr Cullen's grander plan of building a sound and secure future for individuals and the economy.
And this Budget is by far and away Dr Cullen's grandest plan yet.
Like all grand plans, it looks very impressive. Whether it works is quite another thing.
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Colin James, political commentator
You have been spending way more than you earn. A cut in your income tax will only encourage that bad habit. Michael Cullen is admonishing and enticing you to start saving now.
His problem is what two weeks ago he called an "unvirtuous circle" of borrowing, inflationary spending, higher interest rates and a dangerous external deficit.
It's worked a treat, not least to keep voters Labour up to 2005. But it must stop sometime and Cullen wants to nudge you back to virtuousness, with $20 a week subsidy from him and forced help from your employer, who will get help (paid from your taxes) for helping.
Peter Dunne has added some Christian virtue: tax-free giving to charity.
If you're good, next year there will be personal tax cuts -- for 2009. That's the time for a pre-election splurge to try to stall the John Key racer.
Meantime, the fiscal impulse is allegedly not worsened (though some dispute that), the social and heritage bases are covered and there is some virtuous additional spending on exports, science and "sustainability".
In short, a Cullen budget: quirky, cautious, packed with detail that will take weeks to unpick and a teaser for next year.
ColinJames@synapsis.co.nz
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Brian Fallow, business commentator
Providence may be a rather old-fashioned virtue but it is a virtue nonetheless.
It is hard to quarrel with a Budget designed to boost household savings, when by one measure households are collectively spending $1.15 for every $1 of oncome.
By any measure the trend in savings has been going from bad to worse for years, while a debt-fuelled spending boom has been putting upward pressure on inflation, interest rates and the dollar.
The Budget's focus on getting KiwiSaver off to a flying start deals with the immediate problem that personal tax cuts which boosted incomes would be a matter of "now you see it, now you don't", when Reserve Bank governor Alan Bollard raised interest rates in response.
Dr Cullen has also given the Inland Revenue extra money to enforce a provision already in the tax laws, that people who trade in houses are subject to capital gains tax.
The combination of carrot and stick should help to address one of the fundamental drivers of the current dangerously off-balance economy: the widespread conviction that the best way accumulate wealth for your old age is not to save money but to borrow money and buy housing with it.
