Inside Money: Kick stop surprises...

Labour is swinging at wrong political football, writes David Chaplin. Photo / Thinkstock

...and why Labour is swinging at wrong political football, writes David Chaplin.

In a surprise move, the Labour Party laid a breach of privilege complaint last week over Prime Ministerial comments on the KiwiSaver 'kickstart' stop.

"I would be very, very surprised if [KiwiSaver member growth] changes at all as a result of [removing the kickstart]," Key said in a May 26 parliamentary exchange, citing "formal advice" from the IRD.

"Inland Revenue actually said the impact of scrapping the kickstart on KiwiSaver providers would be a 'lower numbers of KiwiSaver members (particularly among the self-employed and children)'," Labour finance spokesman, Grant Robertson, says in the release.

The Labour complaint hinges on this one line buried in hundreds of pages of budget-related documents released by Treasury on July 9.

But the Labour ploy looks misguided. It's not that clear from the cited document whether the IRD is referring to the potential effects of removing the kickstart, and/or cancelling the member tax credit, which were both up for consideration.

The full quote comes under note 44, point a, the likely impact of the proposals 'On KiwiSaver providers': "Lower numbers of KiwiSaver members (particularly among the self-employed and children) and therefore lower revenues from fees and/or a greater number of dormant accounts (if affected individuals stop contributing)."

In fact, the truly surprising element in all of the Treasury kickstart discussion documents released last week, was the weight given to the final IRD KiwiSaver evaluation report. As discussed elsewhere, that internationally-praised study, was mainly based on the first 3.5 years of KiwiSaver.

"Consideration needs to be given to the extent to which judgements of KiwiSaver based on data collected primarily in the first 3.5 years of its existence can be seen as anything other than short-term impacts," the IRD report says.

How much consideration Treasury et al gave to the data deficiencies is unclear.

"... the impetus for the consideration of the current changes was the conclusion of the seven year Inland Revenue-led KiwiSaver Evaluation," the Treasury document cited in the Labour release concludes. "No further evaluation of this kind is planned for KiwiSaver and indeed may not even be possible due to limitations on availability of household savings data."

No more surprises, then.