by Rob Hosking
Minister of Finance Michael Cullen told Parliament on Wednesday that "there are disincentives in employer base superannuation schemes which do need to be addressed," and that he is expecting a Treasury report shortly.
The government is also about to launch a publicity campaign around its superannuation fund.
"The campaign will emphasise that the state provides a basic entitlement and that people should, where possible, supplement this with private savings."
The announcement came after a question from National’s superannuation spokesman, Gerry Brownlee, who raised the recent ASB survey showing 78% of respondents would save more if there were tax incentives, and
AMP’s latest Superwatch survey, which indicates that more New Zealanders now think the government will provide for their old age.Cullen dodged that issue, saying that there were many misleading statements being made about superannuation.
However he rubbished any tax incentives for savings – which is National’s policy - despite both surveys pointing to this as a solution.
"I have an almost limitless queue outside my office seeking tax incentives for all sorts of things. They always point out that given a big enough tax incentive they will respond to that inducement. I'm sure they will, but that doesn’t make it in the national welfare to do so."
Green co-leader Rod Donald asked whether low paid workers would be offered the same sort of tax break now available to those in the 39% tax bracket, who can now pay the 33% rate if they put the money into savings scheme.
"The member raises a valid question, and it's one the government is addressing," was the most Cullen was prepared to say.
The exchange at question time also illuminated the clash between National and Act on the issue. Act finance spokesman Rodney Hide quoted a December 1987 report from the then Minister of Finance – Act founder Roger Douglas – to the effect that the tax breaks then available for savings and for health insurance cost the government 6.5% of the tax base.
"I didn’t often agree with Roger Douglas but on the matter of abolishing tax incentives for both private health insurance and private savings I do agree with him," Cullen said.
The significance of Hide’s intervention is that Act has, of late, stayed clear of commenting on superannuation – leader Richard Prebble’s recent speeches have hardly mentioned the subject. The party has also tended to steer clear of highlighting differences with National. Last week Prebble went out of his way to compliment National on its contribution to a minority report on the government’s Budget Policy Statement, saying that "anyone who thinks National does not have a policy should read this report".
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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