Matt McCarten gets it. He realises the extent of what Michael Cullen has done with Kiwi Saver. Dr Cullen has introduced a de facto compulsory private savings scheme (Sir Roger would be proud of him) and shattered the 14 year consensus on public superannuation. Oh no MP today will say it is shattered, but as Kiwi Saver grows in size, the pressure to have it replace public superannuation as the main source of retirement income will grow. Anyway to quote McCarten:
This budget exonerates Winston Peters.
Michael Cullen …has introduced what is, in effect, a compulsory individualised savings scheme for workers.
The KiwiSaver idea is sold on the basis of securing pensions for retired workers. But what it really signals is that the welfare state, as we know it, is finished. The principle of superannuation and other societal benefits is now being replaced by individual, user-pay schemes run by private investment corporations.
The Government and its allied parties have privatised superannuation and given its control to large, off-shore financial institutions.
The expected 4 per cent contribution from workers is effectively a tax increase for something they have previously received as a right.
An employer paying their employee, say, $25,000 a year (and most do) and contributing 4 per cent to their KiwiSaver gets a tax-break for all that contribution, effectively paying nothing. They also get a 10 per cent cut in their company tax. Business owners should make Cullen head of the Business Roundtable.
The breathtaking paradox is that under a workers’ government, corporates get tax cuts, while workers effectively receive a tax increase.
I don’t go as far as McCarten in making Cullen head of the Business Roundtable, but he is right that Cullen has just announced one of the biggest privatisations in our history. And I applaud this.