Tamsyn Parker

Money Editor for NZ Herald

Budget 2014: Don't expect any KiwiSaver changes

Health and education should get good mentions in this week's Budget announcement. Photo / Christine Cornege.
Health and education should get good mentions in this week's Budget announcement. Photo / Christine Cornege.

Kiwis shouldn't expect any changes to KiwiSaver to be announced in Thursday's Budget despite Labour's controversial proposals for the superannuation scheme.

Mark Lister, head of private wealth research at broker Craigs Investment Partners, said he expected finance minister Bill English to confirm a small surplus in Thursday's Budget, but not much in the way of other lollies.

"We expect health and education to get decent mentions."

Labour recently proposed to make the KiwiSaver compulsory and use it to control inflation and reduce interest rate increases.

"They (National) are happy to paint that Labour policy as wacky."

Lister said any announcement to counter it would be an acknowledgement of the policy.

Housing could also be a surprise winner, Lister predicted.

"There could be something for housing - there could be something that comes out of left field."

Lister said National had not dealt with the housing issue as well as others and it was shaping up to be a big election issue although it was something mainly driven out of Auckland.

"It doesn't really affect those outside of Auckland but that is still a third of New Zealand's population. It's not something that can be ignored."

Geof Nightingale, a tax partner at accountants PriceWaterhouseCoopers said tax cuts were unlikely.

"I think we are going to see some modest measures targeted at individuals, paid parental leave, we might see some more targeted social assistance.

"I don't think we will see anything across the board."

Nightingale said the government would probably rely on economic growth being enough to deliver something for middle income New Zealanders.

"It's going to be pretty boring - but I would give that a big tick."

A boring Budget with no surprises would give certainty to the financial markets, he said.
Nightingale said he would be looking closely at what the government's plan was for the next three years.

"How will they keep us in surplus?"

He said a growing economy should boost the tax take and give the government room to move.

While the tax take was lower than the government had forecast in the latest accounts Nightingale said it was still about $4 billion ahead of last year.

Nick Tuffley, chief economist at the ASB, said the government didn't have a lot of choices because this year's surplus was expected to be so slim but looking ahead over the next few year's there could be something "meatier".

Tuffley said he hoped to see a focus on reducing debt. "We have run up a bit of debt to shield ourselves from the GFC and the Canterbury earthquakes."

While the government had indicated it would spend around about $1 billion extra this year and there was some potential for reprioritisation of spending there was not much scope for announcing big bang policies.

"You don't have a big wish list when Santa's got a big sledge - it's a bit much to ask for a big present."

Tuffley said could be some movement to reduce red tape for businesses to help improve productivity in the face of the high exchange rate.

- NZ Herald

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