KEY POINTS:
National leader John Key says workers unhappy with the proposed cut in savings with the KiwiSaver minimum from 4 per cent to 2 per cent could simply put their tax cut under National straight into their KiwiSaver accounts.
He made the comment repeatedly yesterday after outlining how significant
changes to the KiwiSaver scheme - $3 billion over three years - would fund National's proposed tax cuts.
And he said setting the minimum at 2 per cent of pay would attract more people to join who might have found the 4 per cent minimum too much.
Finance Minister Michael Cullen attacked the policy, saying Mr Key had "savaged" the KiwiSaver scheme.
He said National's proposed changes would mean employers could make their KiwiSaver members effectively pay for their employers' contribution by not giving them pay rises when others received them.
"National's first instinct is to destroy a programme that will help promote growth and to remove important employment rights that protect employees in KiwiSaver."
The KiwiSaver scheme began last year and the provision for phased-in compulsory employer contributions began this year.
Mr Key said the scheme did not suit the difficult economic conditions New Zealanders were facing.
"National's KiwiSaver policy is designed to strike the right balance between increased investment in savings and need to support ongoing economic activity in today's environment."
He said that KiwiSavers would keep getting significant contributions from the Government and their employers.
But Dr Cullen said National was selling the 800,000 members "down the river".
"I think there will be a lot of people on KiwiSaver saying, 'hang on, he has just taken off me a large amount of savings that I thought was going to be going into my account over the coming years and expects me to be grateful for a tax cut which is many cases is only going to be $10 a week or so by 2011'.
"I don't think people are that big a mugs," he said.
"The past 18 months of major stress in international financial markets has highlighted very clearly that New Zealand needs to strengthen its savings culture."
Dr Cullen also criticised plans to repeal the law protecting employees against employers "clawing back the employers' contribution".
National said the repeal would allow employers to give pay rises to non-KiwiSaver members equivalent to the contribution it pays to KiwiSavers.
But its policy paper says that to allay fears that some KiwiSavers could seem to be taking a pay cut to join KiwiSaver, National would amend the act to make it clear that no worker could have his or her gross taxable pay reduced because of joining KiwiSaver.