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Home / Bay of Plenty Times

Our View: Time we gave up our govt safety net

Bay of Plenty Times
11 May, 2011 11:14 PM2 mins to read

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So, it appears the country's financial chickens are coming home to roost.
The weeks leading up to the Budget are traditionally used to "soften-up" the public, a time when some Budget details are slowly allowed to trickle out.
When there's plenty of money to throw around, the news is normally good, albeit
with a caveat that the government keeps its biggest tricks up its sleeve for Budget Day proper. But when things aren't so prosperous, some of the more dire news normally gets announced early, to soften the blow when the full plan is eventually revealed.
Such has been the case this time around, with Prime Minister John Key yesterday confirming one of the worst-kept secrets - next week's Budget will include changes to KiwiSaver, Working for Families and student loans.
Political conspiracy theorists will find much to speculate on over the government's chosen targets - KiwiSaver, Working For Families and the interest-free student loan scheme were all instigated by the previous Labour administration, and are arguably of most benefit to the socio-economic group that traditionally votes with that party.
Mr Key's government has its detractors, and it's those people who will hail the announcement as a sign of a right-wing government showing its true colours.
But something had to give.
Even the most one-eyed critic can see that a deficit of more than $16 billion, coupled with government borrowing of $380 million a week, is not sustainable.
The angst will come from where the government has chosen to make the cuts.
The government intends to reduce KiwiSaver's member tax credit - the 2 per cent subsidy the government pays to savers in the scheme - to make it more affordable.
Individuals and employers will be expected to make up the difference.
Employers may react to the changes with some disquiet, but National will be banking that its traditional core of business support will remain strong.
KiwiSaver was always likely to be targeted for cuts if financial times got tough, and in any event, was introduced as a means to encourage New Zealanders to save and break the debt trap so many people found themselves in.
There's now been plenty of time for that habit to develop, and putting the onus on people to take even greater responsibility, without relying on a government safety net, is surely a good thing.

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