Bank of New Zealand chief economist Tony Alexander says that the Government’s surplus is getting so big that it will have to do something with it.
“From a political point of view the government may have no option other than to start taking measures to reduce the size of the surplus,” he says.
“These may include things like a higher contribution to the NZ Super Fund.”
While such transfers don’t technically reduce the surplus economists tend to take the annual contribution out when calculating what amount of funds the government has left from which to boost spending or reduce the taxpayer burden.
“The Minister of Finance actually has a golden opportunity to make a major dent in future superannuation costs by raising the NZSF contribution. An extra $1 billion a year contribution at least would not go amiss.
“After all, there is no evidence that Kiwi households have taken any notice of all the publicity about saving for retirement.
"We spent the tax cuts we were given in the early 1990s and over the past decade have steadily reduced our savings rate until it is now the worst in the OECD at around 10% of gross domestic product."
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