Labour refuses to provide estimates on KiwiSaver plan

File photo / Thinkstock

Labour is refusing National's challenge to provide estimates of how much an increase in the KiwiSaver saving rate would be needed to prevent a 1 per cent rise in interest rate rises through the official cash rate.

Labour finance spokesman David Parker said the call to provide such a figure was part of a "narrow little game"and he was not going to play it. However, associate finance spokesman Trevor Mallard posted some rough estimates on Twitter last week.

Finance Minister Bill English and Economic Minister Steven Joyce have condemned Labour's new monetary policy tool, known as variable savings rate (VSR), which would give the Reserve Bank governor an additional tool in controlling inflation as well as the ability to raise or lower interest rates.

Labour wants KiwiSaver made compulsory and the bank given the power to lift or lower employees' minimum savings rate within a range yet to be finalised as an additional tool to take heat out of the economy or to free up spending.

While it could cut workers' take-home pay by forcing them to save more, Labour argues the advantage would be going to the saver's KiwiSaver account, not in interest rate rises to overseas banks.

Mr Mallard last week tweeted that according to his "back of the envelope"calculations, a 0.5 per cent lift in the KiwiSaver rate would equate to $187.5 million a year. That would compare to $210 million a year for a 0.25 per cent mortgage rate increase by the banks.

Mr Parker yesterday refused to provide figures however, saying: "You can't consider it in isolation - capital gains tax, the introduction of universal KiwiSaver, they are both more important than the VSR. "I'm not going to play his narrow little game to try and put this down to a narrow little issue when it is a broad issue and all these things are inter-linked."

Mr English said: "It is a pretty critical issue, by how much are they planning to cut low and middle income and take-home pay in order to offset interest rates and they can't tell us. That is what the whole policy is meant to be about."