KEY POINTS:
A business lobby group says employers were "ambushed" by changes to the KiwiSaver scheme that will create industrial unrest for years to come.
Business New Zealand chief executive Phil O'Reilly told a select committee considering legislation on the workplace savings scheme that the Budget day announcement on compulsory employer contributions was unexpected.
"It was the worst political ambush seen in 20 years," Mr O'Reilly said.
Employers had been willing to support a workplace savings scheme if it had been "compliance light" and based on "no-surprise" consultation.
This had changed on Budget day when employers were lumbered with the compulsory contributions and the risk of administering the scheme.
"Clearly, ambush trumps consensus."
Finance Minister Michael Cullen had called for consensus around retirement issues, but this clearly did not include employers.
In the Budget, Dr Cullen announced employers would have to pay into employees' KiwiSaver accounts a contribution of 1 per cent of their gross salary, rising to 4 per cent over four years.
Mr O'Reilly argued that this would create industrial unrest.
Employers would have to negotiate different wage rises for different employees based on whether they were in the scheme or not.
Mr O'Reilly said this would cause tension in the workplace, especially if someone negotiated a pay rise on the basis they were not in KiwiSaver and then afterwards joined up.
This would mean that person had gained a larger wage rise than their colleagues.
The bill should be amended so that any required employer contribution should be recognised as part a total employment package whether or not the employee joined KiwiSaver.
Mr O'Reilly acknowledged the Government would be partly subsidising the employer contribution, but said this would have to be inflation indexed to maintain its usefulness.
The committee also heard yesterday from other employer groups and unions.
Alasdair Thompson, chief executive of the Employers and Manufacturers Association, said the idea of KiwiSaver was a good one, but it had been poorly executed and implemented.
He said the association was not opposed to compulsory contributions provided that was part of an employee's total remuneration.
A good way of getting KiwiSaver introduced would have been to "reduce taxation and made that the contribution for the employer into KiwiSaver".
In its submission, the Council of Trade Union argued to lower the entry point for KiwiSaver contributions to 2 per cent.
It also wanted employer contributions of not less than $20 a week given that an employer tax credit was available and contributions to KiwiSaver should be over and above wages and salary.
- NZPA
