National fired a broadside yesterday at Labour's plan to control interest rates with the help of compulsory KiwiSaver after finding the policy was resonating with some businesses.

In an attack yesterday reminiscent of John Key's "show me the money" lambasting of Labour's financial programme ahead of the last election, Economic Development Minister Steven Joyce called on finance spokesman David Parker to put numbers to the impact of Labour's plan to reduce interest rate hikes by increasing KiwiSaver contributions.

Mr Joyce claimed Labour would have to increase KiwiSaver contributions to 15 per cent of employee earnings to prevent interest rates rising by 1 per cent.

He said Mr Parker needed to give numbers on how his "variable savings rate" would affect interest rates.


National had decided to make these points yesterday because some firms thought it would be good, "as employees were being asked to tighten their belts, and the businesses will be able to go on borrowing money at the same interest rate as they did before ..."

But Mr Parker said: "[Joyce] makes a fundamental error. We don't say it's all about the variable savings rate [VSR]. We say it's the combination of introducing universal KiwiSaver which is more significant than the VSR, plus capital gains tax, plus building affordable houses to take the heat out of the property market, plus ring-fencing losses on investment property, plus other incentives to get money into the productive part of the economy rather than the speculative part of the economy.

"All of these things take inflationary pressures out of the economy in a way that reduces interest rates."

Mr Parker said National was "terrified of the policy because they know it makes sense".

Labour's idea found support from former National and Act leader and Reserve Bank governor Don Brash, who said he saw some merit in the scheme.