Support for Labour's KiwiSaver plan from Brash

The Labour Party's latest monetary policy, increasing KiwiSaver contributions to control inflation, has gained support from Former Reserve Bank Governor Don Brash.

Labour deputy leader David Parker last week unveiled his party's "upgrade" of monetary policy, proposing that New Zealanders be forced to save more through higher KiwiSaver contributions to control inflation, rather than the Reserve Bank lifting interest rates.

Dr Brash told TVNZ's Q+A show he saw "some merit" in the scheme.

"Labour has recognised that there's a need for another instrument to get some pressure off the exchange rate and I think it's a sensible thing to do. Will it work? I'm not sure."

But Dr Brash said he did not support Labour's proposal to make KiwiSaver compulsory.

"I don't favour compulsory saving for retirement - there is very little evidence that it's increased savings in Australia, KiwiSaver has not increased our savings rate here at all."

Labour Leader David Cunliffe told Q+A the move to a compulsory savings rate of 9 per cent would be slow and gradual.

"The movement into compulsory KiwiSaver and the gradual increase in the contribution rate will be very gradual, very slow, half a percent to one percent a year. We do not want to see people's real incomes going backwards."

He said KiwiSaver would not be guaranteed by the Government.

"But people will have the choice to put them in very low or very moderate risk investments, and because this is broad based across the economy and there will be a large number of institutions involved, we think that risk will be extremely low."

He said the new monetary tool would benefit all New Zealanders.

"Lower income New Zealanders will benefit from having lower rents. Those who have their own homes will have lower mortgages, they'll also have higher wages starting with an immediate increase in the minimum wage to $15 and then a second increase during our first year in government.

"Many will find themselves at least on the living wage across the state sector."


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