Finance Minister Nicola Willis says the Green Party’s claim that KiwiSaver changes could cost the Government up to $714 million is “wrong”.
Willis said the cost would be “vastly smaller” than the figure Chlöe Swarbrick “is bandying about”.
She told the Herald the figure was “more like in the quantum of between $100 and $200 million” and is exploring whether it can be released publicly.
Swarbrick, the Greens co-leader, says her party’s calculations were done on the best public information and she’s pleased her party’s “meticulous digging” has led the minister to release advice she’s received on the matter.
Following the Budget in May, the Greens claimed the Government hadn’t accounted for costs that will be incurred due to default KiwiSaver contributions rising over the coming years from 3% to 4%.
The Government employs thousands of people, so will have to increase its payments to match those contributing the higher rate. The Greens estimated the unaccounted cost was between $633 million and $714 million.
The potential financial burden for the Government was referenced in the Treasury’s Budget Economic and Fiscal Update, but it did not come with a cost estimate.
Willis at the time said Swarbrick’s figures were “ludicrous” and agencies were assessing potential implications of the change.
If additional funding was required, it would be provided through next year’s Budget, she said.
During a Select Committee hearing on Wednesday morning, under questioning from Swarbrick, the Finance Minister revealed there was a ballpark figure, but she’s unsure if it can be released publicly.
“I want to be careful before I confirm that number because I am not sure how sensitive it is in terms of wage negotiations and collective bargaining, so I would check that before I provide it ad hoc in this committee,” Willis told Swarbrick.
“But what I can say, it is vastly, vastly smaller than the number you have been bandying about.”
She said the Greens’ estimates “are wrong”.
The Herald later asked the minister if her figure came close to the Greens’ $700m calculation.
“No, no, no, no, more like in the quantum of between $100 and $200 million, at the lower end of that,” she said.
Swarbrick said her party’s estimate was “based on the best possible information that is publicly available”.
“The burden should be on the Minister to show her working and to make transparent to the public what kind of advice she is making decisions upon,” she told the Herald.
The Greens’ co-leader said costs would have to be met through “future hidden cuts” to agencies, more money in next year’s Budget, or by “wage suppression”.
Willis said during the hearing that the Government “will have to make the same decisions and trade-offs that employers across the country will be making”.
Budget documents show officials believe employers will offset about 80% of their higher contributions “via lower-than-otherwise wage increases” and this will have a negative impact on household spending.
Swarbrick said that “begs the question of when the Government’s talking about growth, who are they about growth for?”
The Minister told the committee the KiwiSaver changes shouldn’t be considered in isolation, but alongside initiatives like Investment Boost, which officials do believe will result in benefits for workers.
During the Select Committee, the minister also responded to a claim from the Greens that when similar KiwiSaver changes were made by the previous National Government, that John Key and Bill English created a special fund to pay for it.
Willis said she had received advice from Treasury that suggested her Budget dealt with the costs in a way consistent with Key and English.
“It is something I have been wanting to correct the Member on for some time,” she said.
She said in the first instance, agencies will assess their potential costs and look to meet these through the funding they currently have.
If additional money was required, the Government would consider that at the next Budget.
“This approach is consistent with that taken when KiwiSaver contributions were increased in 2013 through Budget 2011. Agencies were expected to cover KiwiSaver costs from existing baselines.”
Swarbrick told the Herald she found that statement interesting as she was aware of a Cabinet paper where the previous National Government had set a fund aside.
Cabinet papers from 2011 do show there was a fund to pay for Government employer contributions, but ministers agreed at the time to terminate this centralised funding from mid-2012.
The cut-off date was after the Key Government’s KiwiSaver changes were announced in the May 2011 Budget, but before they came into effect in 2013.
A March 2011 document says a “wide range of State sector agencies are reimbursed for the cost of employer contributions to KiwiSaver through a central fund”.
“Insulating State sector employers from this cost is inconsistent with our objective to shift the balance of economic activity in the economy towards the tradeable sector,” the paper says.
“It is important that State sector employers face the same cost pressures that we are asking private sector employers to bear.”
One of the papers says: “Centralised funding was introduced by the previous Labour-led Government”.
A press release from the Public Service Association in 2007 celebrated the then-Labour Government providing departments “with the money to make their employer contributions”.
Jamie Ensor is a political reporter in the NZ Herald press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. In 2025, he was a finalist for Political Journalist of the Year at the Voyager Media Awards.