'Fundamental issues' need to be addressed with National's KiwiSaver policy, Labour says

Labour leader Chris Hipkins says there are still some fundamental questions National needs to answer on its election KiwiSaver policy, particularly in regards to making it compulsory.

National has released a series of policies, including a pledge to increase the default minimum contribution rate, make the scheme compulsory, automatically enrol babies, pay a contribution to people on parental leave, and extend employer contributions to include workers over 65 years old.

Hipkins told Morning Report increased KiwiSaver savings would be good for individuals and for New Zealand.

But he there were some "big fundamental issues" National had not addressed with its policy, including that making it compulsory could put people who were not contributing, and were struggling to make ends meet, in more financial hardship in the short-term.

"Simply making something compulsory doesn't make it more affordable," he said.

"One of those questions is what they're going to do for those people who can't afford to be in KiwiSaver at the moment, because it's not that people aren't in KiwiSaver because they don't like it, it's that they're not in KiwiSaver because they can't afford it."

In a cost-of-living crisis, Hipkins believed making KiwiSaver compulsory had "the potential to make it worse" for a lot of families.

However, on the 'Baby Boost' payment, Hipkins said getting young people into KiwiSaver had "real merit" and it was something Labour was open to having a conversation about.

Labour is yet to come to the table with its own election KiwiSaver policies. Hipkins said the party was "proud" of the scheme, and it would set out its policy "in due course".

So far, Labour has announced policies in health and public transport.

Those health policies would be funded out of the revenue collected from a capital gains tax on investment and commercial property.

Hipkins said Labour had announced the "bulk" of the policies it would fund out of the CGT.

"The capital gains tax that we've set out still raises slightly more revenue than the policies that we've announced so far, so we've got a little bit of a buffer there, but we've announced the bulk of what we're intending to fund out of the capital gains tax."

He would not entertain the Green Party's proposals around wealth and inheritance taxes, and an increase to the corporate tax rate for large businesses.

"We're one of the only countries in the world that doesn't have a capital gains tax. If we were to introduce a wealth tax, we'd be one of the only countries in the world to have that, and there are some real potential issues around that, around people just moving their money to where they don't end up paying that tax."

National to 'consult' on ending total remuneration

Some business leaders have warned small businesses would struggle with the extra costs of National's proposal.

But economist Shamubeel Eaqub believed the impact on businesses would be "very minor" because most people working were already contributing.

National's finance spokesperson Nicola Willis appeared on Morning Report to answer listeners' questions on KiwiSaver.

While National does not have an explicit policy to end total remuneration (in which employees pay both their own KiwiSaver contribution and that of their employer out of their total salary package), Willis said if KiwiSaver was compulsory, she did not think those sorts of arrangements should continue.

"Everyone's job and pay should be advertised on the same basis, that is an expectation that everyone will have an employer contribution going into KiwiSaver, so it should be advertised in the same way," she said.

Willis said if re-elected, National would consult with employers and employees on how to make "transition arrangements" for people already on total remuneration packages.

"We're living in a world now where National is saying KiwiSaver is for everyone, it's no longer something that can be negotiated out of a contract, so you should be updating your approach to reflect that."

Willis acknowledged compulsory KiwiSaver would be "a big step up" for some earners on low wages, but around 90 percent of people earning $50,000 a year or more were already contributing.

"That's around where the minimum wage sits. So, what we know is that overall people can see the value of putting away that small amount of money, and of course they're not contributing that full six or eight percent as it will be in due course," she said.

"They're contributing half of that, and by making that contribution, they get that bonus from their employer. And we don't want low-income people missing out on that, because we see massive inequity in their retirement future, which is that there will be some people who are the 'haves' who have a KiwiSaver balance at retirement, and others who have nothing, and we think that inequity needs to be solved."