National has been forced to announce it will back the turbo-charged KiwiSaver after a backbench MP incorrectly told a business audience that compulsory employer contributions was not party policy.
National's industrial relations spokeswoman Kate Wilkinson indicated to a forum of human resource managers this morning that rumours National would scrap the contributions were correct.
National has yet to confirm whether it would back the compulsory contributions and the government tax credit that subsidises employers for making the payments.
Labour Minister Trevor Mallard, who was at the forum, told the media of Ms Wilkinson's comments.
Ms Wilkinson then said in a statement she misinterpreted the question.
She then appeared to make a major announcement on behalf of her leader John Key.
"National will release its KiwiSaver policy later this year, but suggestions that National will do away with compulsory employer contributions to the scheme are incorrect," Ms Wilkinson said.
Mr Mallard said there was no doubt that Ms Wilkinson understood the question was about compulsory employer contributions and rumours that National would scrap it.
"She said - and I quote - `the National Party is not a party of compulsion'. That is something I took down at the time, I was very surprised and I think it was something which is designed to undermine KiwiSaver," Mr Mallard said.
Others attending the forum confirmed to NZPA Mr Mallard's version of events and said everyone who was listening took it to mean that National would scrap compulsory employer contributions.
Mr Key said his MP's initial comments were incorrect and she had not been involved in the policy design, however he indicated her later statement was right.
"We haven't finalised our KiwiSaver programme yet, but there will be compulsory employer contributions," Mr Key said.
"There are likely to be at pretty similar levels to what is outlined in the legislation at this point."
He said this would be backed by continuing government subsidies.
Mr Key said he was frustrated his MP had got it wrong, but everyone made mistakes.
Finance Minister Michael Cullen said he believed National wanted to scrap the contributions to free up more than $2 billion over four years for tax cuts.
The employer contribution is offset by a tax credit from the Government of $20 per week.
To a person on $45000 a year the employer contribution would be worth $1800 a year from the fourth year of the scheme operating and this would be offset by an annual $1040 tax credit, Dr Cullen said.
Scrapping the tax credit would probably save $2 billion over four years, depending on how many people join KiwiSaver.
Asked if he welcomed National backing one of his centrepiece policies, Dr Cullen said he did not believe them.
Until today National has never said whether it would back the "turbo-charge" of KiwiSaver which came into effect in April,
There has been a large increase in the numbers of people signing up to KiwiSaver since the extra contributions came into force, with more than 600,000 now enrolled.