Published in the National Business Review of of 15 June 2007

Boosting retirement savings without also improving the economy was the wrong approach, National's Deputy Leader and finance spokesman Bill English told business leaders this week.

He said savings were important,, but the country's wellbeing was not all about preparing for retirement.

"We need a productive economy to invest in. We need to focus on growth ...and ensure there are plenty of growing businesses in New Zealand needing capital."

Praising the $1.2 billion of business tax cuts as "a good piece of policy", Mr English said KiwiSaver Mark Two had been forced upon Michael Cullen by circumstances.

"He, like me, has been sceptical about the use of incentives to boost savings, but he had to find way of dispersing the surplus.

"I'd have preferred to see the mark one version - the one without incentives - get up and running before it was turbocharged.

"Fiscally the mark two version is very expensive. It's going to take $1.1 billion out of households, and the fiscal cost to the government is $1.2 billion.

The update on KiwiSaver is forecast to be only 50%, and the Reserve Bank was people to draw down on term deposits to get into KiwiSaver.

The KiwiSaver scheme would not provide a large pool of capital, and would not lower the current account deficit.

"It didn't in Australia where they already have much higher rates of compulsory contributions than we are planning here," Mr English said.

"The six default providers for the KiwiSaver scheme are all cash and bonds. They are providing nothing that the ordinary person couldn't do for themselves. And no one would go into that kind of scheme but for the government subsidy."

After the painful changes of the 1980 and 1990s people wanted consolidation and Labour had read that mood very well, he said.

" But we have had a cuppa, and we are now waking up. Not enough has happened in the last nine years. The gaps between Australia and New Zealand have grown. It was time to re-energise the process of economic reform."

KiwiSaver was not a panacea, he said. The Budget statement said it aimed to strengthen the government's balance sheet to manage the risk of demographic change.

"But you can't sell the prospect of plush retirement homes to young people on the basis that they have to stay in a boring job all their lives."

We need to be focusing on growth, Mr English said. He ran through National's agenda of changes: cuts to personal income tax, including the prospect of a rate of 20 cents for middle income earners; more spending on infrastructure; higher standards in education; and improving the quality of government expenditure.

National favoured public/private sector partnerships to build infrastructure, where it was sensible to do so.

There would be a KiwiSaver scheme under a National government, but it would be "cheaper, simpler, and more honest."

In response to Mr English, Dr Cullen said National had failed to explain its position on the budget's changes to KiwiSaver

"(Mr English) said National would keep some form of KiwiSaver, but once again has failed to say exactly what this meant," Dr Cullen said.

"From July 1, thousands of workers will sign up to KiwiSaver and will see their savings boosted by the $20 a week tax credit and the phase in of employer contributions.

"Workers need certainty before making long term decisions. National needs to be honest with them as it has very little credibility over superannuation."