KEY POINTS:
Regardless of the pros and cons of the expanded KiwiSaver scheme, the Budget initiative has enabled Labour to put some real heat on National for the first time since John Key took over that party's leadership six months ago.
Helen Clark and Michael Cullen relished the opportunity yesterday to apply the "blowtorch" to Mr Key and Bill English to declare whether they would scrap the new version of the retirement savings scheme.
Unlike previous Budgets, last week's remains a talking point largely thanks to KiwiSaver, which has Labour once again setting the political agenda after months in the doldrums.
The immediate post-Budget reaction focused on the advantages and disadvantages of signing up to KiwiSaver, but Labour's judgment that public reaction is largely positive has allowed it to shift debate onto National's refusal to say whether it would retain the scheme.
National will hold its nerve. It is reserving its position because it does not want to be seen to be endorsing the Budget. But beyond that, it is in no rush to show its hand before July 1 when KiwiSaver is up and running.
If National is going to pull the plug on KiwiSaver, it could be argued it might be best to say so before then.
That way employees thinking of signing up to the scheme know where they stand. However, National thinks there is little risk of annoying KiwiSavers if it ditches the scheme.
National believes the uptake will come principally from firm National voters who save already - not the swinging voters in the mortgage belts.
Moreover, by election-time next year, National is punting that KiwiSaver accounts will not be plump enough for people to get too upset if the scheme is slashed to its pre-Budget state. The employer contribution will still be pegged at 1 per cent of gross salary, while tax credits would be little more than $1000 by then.
Likewise, while employers might get sniffy at having to establish KiwiSaver-compliant schemes in their workplace or align existing schemes to KiwiSaver rules only for National to dismantle the whole apparatus, they will be compensated by seeing an end to compulsory employer contributions.
Even so, in reserving its position, National is leaving a vacuum which Labour is filling by interpreting National's refusal to be drawn on the scheme's future as an indication National will ditch it. After all, National has been so critical of the scheme, it can hardly go into the election saying it would leave it intact.
Furthermore, with Act unhelpfully suggesting that the $12.5 billion in Dr Cullen's superannuation fund be divvied up among taxpayers, National's silence also leaves it vulnerable to charges that a centre-right Government would dismantle superannuation entitlements as well.
But the reality is that National will not scrap KiwiSaver because it most probably cannot. National needs friends. Peter Dunne's United Future is unlikely to countenance the scrapping of KiwiSaver, while post-election talks with NZ First would not pass first base such is Winston Peters' ardent belief in compulsory savings.
That is the bottom line within which National's policy on KiwiSaver will be written. It is more likely that National will alter the scheme so it dovetails with National's tax cuts.
National will want a package that is more attractive to voters than Labour's. If National wants to govern, such a package must also be attractive to potential support parties.
