Further KiwiSaver cuts not ruled out

Prime Minister John Key gave his post budget speech to the Trans-Tasman Business Circle today. Photo / NZPA/Wayne Drought

Further cuts to KiwiSaver and Working For Working are not on the Government books, but Prime Minister John Key has ruled nothing out.

This year's budget halved government contributions to KiwiSaver, cut Working For Families payments to about 110,000 families, and tightened criteria for student loans.

It confirmed plans to partially sell state assets, lower the government stake in Air New Zealand and save close to $1 billion in the public sector.

Following his post-budget speech in Auckland today, Mr Key told media the Government had no plans "at this point" to further trim KiwiSaver and Working For Families, but would not rule it out.

"We have put our best foot forward, we put those schemes on an affordable footing. We think they reflect the times and we think that makes them enduring. That's certainly been our hope and our ambition," Mr Key said.

"You learn in life, I guess, to rule nothing out."

The KiwiSaver tax credit worth about $20 a week was cut in half while employee and employer contributions would increase from 2 per cent to 3 per cent.

Critics have said changes in the budget would take away incentives to save and would widen the income gap.

Labour leader Phil Goff today was quick to assure that he would stop asset sales if elected, but was not drawn on whether he would restore cuts to KiwiSaver and Working For Families.

"We are going to have to cope with the deficit of $16.7b. That means that Labour will have to find savings, will have to find efficiencies, won't be able to pull out of its plan and put its policies into effect immediately, or even to reverse all of the cuts," he said.

"I cannot say today what we'll be able to put back in place."

Meanwhile, the public sector has made savings over the past three years, and Mr Key believes more can be done.

"Everybody who knows the system knows that there is the capacity for us to save more money."

Mr Key said reviews had indicated the number of departments was on the high side for a country the size of New Zealand.

The Government has plans to merge more departments over time, but it wasn't set in concrete.

"We're sitting down with those chief executives working through a programme of reform in the public service."

Finance Minister Bill English, after a post-budget speech in Wellington, said there were no estimates about the number of jobs that could be lost.

"It's not fundamentally about the jobs, it's about the services to the public, and often it means people changing jobs and sometimes it will mean less jobs."

Between $300m and $400m could be saved if all the departments moved to the average costs for things like administration, he said.

- NZPA