Labour went into the election promising to siphon off 8c of every tax dollar collected into a dedicated super fund which would be used to partially fund the state pension.
The idea has never had strong support amongst other political parties. Alliance leader Jim Anderton told SuperTalk before the election that he would need to be convinced it was a sensible idea.
However, Labour and the Alliance are in discussions over superannuation at the moment and it appears Labour is prepared to show some flexibility on the funding issue.
Cullen told the Finance and Expenditure Select Committee today that one option being considered was to fund the dedicated super fund from other Government sources such as surpluses.
This fits with the Alliance's position of wanting a broader funding base for the dedicated fund than just personal taxes.
"Dedicated tax is less important than getting political support for a durable solution," he says.
While Cullen has shown some flexibility on the funding issue, he says the other parts of Labour's super policy remain unchanged. For instance the super fund would be managed by the private sector at arm's length from the Government, and a board of guardians would run it.
Opposition finance spokesperson Bill English today welcomed the Finance Minister’s decision to back away from the dedicated superannuation tax.
National said it was time for the government to "re-activate a non-partisan approach to superannuation." This is despite the fact that National was the party which broke the earlier Accord in its last term, and made unilateral changes to NZ Super.
Cullen says talks with the Alliance are progressing well and he expects some decisions to be made in "weeks rather than months".
"We are making useful progress," he says.
Meanwhile, the Greens have welcomed Labour's flexibility.
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