By VERNON SMALL
National says it would drain the Government's planned multibillion-dollar pension fund to pay off debt and then look at cutting taxes if it found the scheme unsatisfactory.
The fund, due to kick off next July, will need the backing of New Zealand First or the Greens, although a deal between Labour and Coalition partner the Alliance is close.
If approved, the scheme would have about $2 billion invested by the next election. The Treasury foresees ongoing net contributions of about $2 billion a year after that.
National's finance spokesman, Bill English, told a superannuation conference yesterday that paying back debt and tax cuts were his party's preference.
But National did not reject outright Labour's plan to partially pre-fund the cost of baby boomers' pensions, although it should be thoroughly scrutinised.
Mr English made it clear National had strong reservations about the scheme.
He said National wanted any new policy to provide long-term certainty, be flexible, enhance economic growth and be fair between generations.
The scheme might be good for the Government's books but bad for the economy, he warned. It would reduce the incentives to save and keep taxes too high as the funds built up.
Earlier, Finance Minister Michael Cullen told the conference that he hoped National might let "a higher ethic prevail" and back the fund.
He confirmed that he had abandoned plans to set aside a slice of income tax for the scheme after opposition from the Alliance and the Greens.
Instead, it would be funded through a proportion of the gross domestic product.
National finds little good in Labour pension plans
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