Budget Sparks Concerns About Industrial Relations
6:37 am, 18 May 2007
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Business New Zealand is concerned the savings incentives offered in yesterday's Budget could provoke industrial strife.
The revised Kiwisaver scheme includes compulsory employer contributions, as well as tax credits for both workers and companies.
The Minister of Finance, Dr Michael Cullen, says employers could offset the cost of their contributions against wage or salary demands by their staff.
But Business New Zealand says it will not be possible for employers to negotiate on that when their participation is being made mandatory.
Chief executive, Phil O'Reilly, says wage demands are likely to be made in addition to Kiwisaver contributions, saddling employers with big costs.
National Distribution Union say it is unlikely to accept Kiwisaver contributions in lieu of pay rises because its members earn too little as it is. National secretary, Laila Harre, says the scheme is not workable.
The Council of Trade Unions supports the plan.
Economists say the budget's focus on boosting savings will help the Reserve Bank's fight against inflation in the medium term.
The Finance Minister, Michael Cullen, exceeded his own budget spending limit yesterday by $600 million.
But he does not believe it will cause the Reserve Bank any concerns as the overall surplus is bigger than expected as well.
He says the boost to KiwiSaver is also likely to help ease inflation pressures in the medium to long term.
Economists say increasing savings will help to reduce consumer spending and take money out of the economy unlike tax cuts
But some say the Reserve Bank is not likely to reap the benefits of more savings for five years.
The National Party says the Budget will leave workers feeling short-changed.
Changes to the KiwiSaver scheme include compulsory employer contributions and tax breaks of up to 20-dollars a week to off-set the cost to business.
Employees who sign up to the scheme will get the same amount in tax credits.
But National's leader, John Key, says workers in KiwiSaver will have to give up any wage increases for four years while employer contributions to the scheme progressively rise.
The Green Party has accused the government of failing to address its “green” goals in the Budget.
Green Party co-leader, Jeanette Fitzsimons, says more money could have been put into investing in cleaner technology and sustainable infrastructure such as public transport and coastal shipping.
She says there was no commitment to put real money behind attaining carbon neutrality and sustainability, despite the $1.7 billion surplus.
The New Zealand First leader, Winston Peters, says the reworked KiwiSaver scheme is the bright light in the budget.
Mr Peters says while they are long overdue, the changes to the KiwiSaver scheme are a giant leap forward.
He says KiwiSaver will change the psyche of people as they will have a stake in the economy, like they have never had before.
The United Future leader, Peter Dunne, says the enhanced KiwiSaver scheme is forward-looking, and will reward those who make a long-term commitment to their future.
Mr Dunne, who is the Minister of Revenue, says the budget will encourage a savings culture, as well as promote business investment.
