Finance Minister Nicola Willis says government departments and agencies are currently assessing the potential cost of the Government’s decision tophase in increased employer contributions to KiwiSaver that will reach 4% by 2028.
Speaking to RNZ this morning, Willis said any cost could be met with new spending in next year’s budget, or be covered through cuts.
Her comments came amid her response to the Green Party’s claim the additional cost of potentially $700 million had not been accounted for in this year’s Budget, which Willis deemed “ludicrous”.
One of the main features of Budget 2025 was the Government’s decision to increase the default KiwiSaver contribution rate for both employees and employers from 3% to 3.5% from April next year, and 4% from April 2028.
The Government also halved its contribution to $260 for people earning less than $180,000 and scrapped it entirely for those earning more.
Across the next four years, it would give the Government almost $2.5 billion in savings and more than $500m in expected revenue.
Greens co-leader Chlöe Swarbrick says she's found a hole in the Government's Budget. Photo / Mark Mitchell
In a statement this morning, Green Party co-leader Chlöe Swarbrick claimed the Government had failed to account for what could be $633m-$714m in additional costs.
“If she’s honest with New Zealanders, that means the Government has intentionally hidden more than half a billion dollars extra in public service cuts to come,” Swarbrick said of Willis.
The potential financial burden for the Government is referenced in the Treasury’s Budget Economic and Fiscal Update, but it did not come with a cost estimate.
Willis claimed Swarbrick’s numbers were “out of whack” and “quite ludicrous” but acknowledged Crown agencies were currently assessing the “potential implications”.
“They’ll then provide advice to the Government. If additional funding is required, I expect it would have to take the form of a pre-commitment against next year’s budget operating allowance,” Willis said.
However, she later told RNZ it was possible any costs could be satisfied by cuts, while noting it was “far too soon to say”.
“It may be that we say this needs to be met with additional funding, it may be that we say there’s something we can reprioritise elsewhere.”
Willis said she expected all government contractual obligations, including those regarding KiwiSaver, to be met and suspected employer contributions would form part of future pay round negotiations.
She acknowledged the Government had “limited visibility” of what its KiwiSaver obligations were.
Swarbrick predicted the Government would cut spending from essential public services to make up the extra cost.
“If the Government doesn’t front up with the funds between now and April next year when the first set of changes come into force, Christopher Luxon and Nicola Willis will be forcing immediate cuts directly to frontline services in health, education and social services to pay for their fiscal hole.”
Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.
