KEY POINTS:
Chief executives of New Zealand's leading companies strongly support the introduction of compulsory superannuation.
Before the Budget was unveiled on May 17, 82 per cent of chief executives responding to the Herald's 2007 Mood of the Boardroom survey said compulsory superannuation should be introduced.
Some hail the Budget's
announcements on KiwiSaver as a "bold, positive step'' and a "good start to addressing savings problems'' - others are up in arms.
At issue is Finance Minister Michael Cullen's failure to consult them before announcing that from next April businesses will be forced to begin matching their employees' KiwiSaver contributions.
Businesses, which were still scrambling to get ready for the introduction of KiwiSaver (Mark 1) had not factored in the Government's surprise move.
"There's a good case for despair amongst business,'' said Rural Portfolio Investments managing director Craig Norgate.
"Business doesn't like surprises and while I actually personally support compulsory superannuation, what we're being dished up is appalling.
"For people to smile glibly and take credit for a surprise - when it's a surprise that will put some businesses out of business - spells the end of a long period of healthy relationships.''
A food industry boss said the Government clearly wanted to inject an "element of positive surprise'' in the Budget.
"But it's completely compromised industries' ability to effect changes with care and consideration.''
Another chief executive said, "While its introduction was slightly dishonest, the end result is OK''.
Fonterra chief executive Andrew Ferrier said the lack of policy detail will pressure businesses and employers to respond quickly.
Another food industry CEO said his company faced the prospect of dismantling a far superior company super scheme, simply to manage the raft of compliance issues the late changes have created. "It's a mess.''
Two-thirds of chief executives now want the Government to undertake consultation on KiwiSaver's design to ensure it can be efficiently implemented.
"It has been made too complicated and very bureaucratic,'' observed EMA Northern CEO Alasdair Thompson.
KiwiSaver will ultimately create a big pool of investment funds which NZX chief executive Mark Weldon believes will boost the New Zealand economy and provide ready capital for local businesses.
Nearly 80 per cent of chief executives believe state-owned enterprises should be partially privatised so that KiwiSaver funds can be invested in them.
Seventy-five per cent say the Government should also launch public private partnerships.
The Herald survey provides an insight into why Cullen decided to make employers match their employees' KiwiSaver contributions.
From April 1, 2008, they will have to contribute one per cent of an employee's pay to their KiwiSaver account, rising by one per cent a year until 20111-2012 when their compulsory contribution will reach four per cent.
Before the Budget announcement, just 50 per cent of CEO respondents said they intended to contribute to their employees' KiwiSaver schemes. But 85 per cent of SME respondents said they would not contribute.
There is already considerable disparity on the level of company super contributions. Fonterra kicks in up to 10 per cent of the salaries of collectively employed staff. Others offer a range of "salary sacrifice'' options.
A series of EMA post-Budget seminars has confirmed SMEs are very concerned that the KiwiSaver changes will boost overall wage and salary demands.
This is reflected at major company level where chief executives fear they will soon be enticed into an auction system, where employees who decide not to join KiwiSaver will ratchet up their own pay negotiations to see if they can achieve an equivalent total remuneration package to those that sign up.
One chief executive said the fact that KiwiSaver is voluntary will make it very difficult to forecast wage and salary costs when employers do not know how many of their employees will sign up. "It would have been easier to just introduce compulsory super on an across-the-board basis.''
Others say their staff object on philosophical grounds.
"KiwiSaver and its ramifications is really annoying staff,'' said an energy sector chief executive.
"They object to the use of compulsion to obtain tax benefits.
"They also 'hate' it being offset against salary increases.''
But not all the sentiment is negative.
An energy sector CEO said KiwiSaver was an excellent start. "They should have moved straight to the four per cent.''
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Tapping the mood of business
The New Zealand Herald Mood of the Boardroom survey, with Business New Zealand, focuses on New Zealand's international competitiveness.
We set out to find out what chief executives and proprietors of a range of businesses thought about the state of the market and the challenges the country faces. Most responded before this month's Budget but we also polled chief executives after the Budget to find out what they thought of measures introduced by Finance Minister Michael Cullen, such as compulsory employer contributions to KiwiSaver and cuts in business tax.
Some 70 chief executives from large companies and 135 heads of small and medium enterprises (SMEs) took part - a response rate of around 40 per cent.
The CEO survey database was drawn from the Deloitte-Management Magazine Top 200 list, the Business Council for Sustainable Development and the Business Roundtable.
Small and medium business responses came from Business New Zealand members.
