Change is in the wind

John Key has made a significant speech to Business New Zealand this afternoon; his last major speech before next Thursday's Budget. The full transcript of the speech can be found here, but there are some significant changes to Working For Families, the Student Loan scheme and Kiwisaver in the wings - Stuff reports:

It was clear, he said, that ''the high costs'' of KiwiSaver, Working for Families and interest-free student loans were unaffordable in the longer term.

''The changes we will make in the Budget will ensure they are more enduring and sustainable.''

The three schemes targeted for cuts collectively cost almost $5 billion a year.

"These programmes were introduced during a debt and consumption-driven economic bubble, and it is clear that they are unaffordable.''

Key did not go into a lot of detail about the cuts, but he confirmed that less would go in to KiwiSaver accounts from tax credits and more would go in from both individuals and employers.

The $1000 kick-start for new KiwiSaver members would remain in place.

"The changes to KiwiSaver won't happen immediately, and this will give people and businesses time to adjust," Key said.

"Increased contributions from people and businesses will happen at a time when the economy will have well and truly recovered, and both wages and employment will be increasing."

Working for Families would also become ''a little less generous to families higher up the scale''.

"We will do this gradually, in a way that minimises the impact on families," Key said.

The student loan scheme would also be ''adjusted'' but would remain interest-free.

Now we'll disclose a conflict of interest here; we're KiwiSaver members, but we don't receive anything from WFF, and we don't have a Student Loan. Due to some bad decisions in our past, our retirement savings took a hit, and we jumped at the chance to join KiwiSaver a couple of years ago to at least save SOME dosh for our retirement.

The decision by the government to cut tax credits will slow a progress, but in all probability we'll save a bit harder, and make up the difference ourselves. We suggest there will be many like us. At the end of the day it's our responsibility to provide for our retirement so that we're not a drain on the long-suffereing taxpayer.

Whilst the decision to make changes to KiwiSaver will cost us, we understand the need for it, and it's one of those "greater good" situations.

The devil of these proposals of course will be in the detail, and Bill English will give us the detail next week. But we like the fact that John Key is prepared to go to the election in November seeking a mandate for proposed changes.

The Labour opposition ("opposition" is perhaps being a bit charitable to them) is accusing National of breaking election promises; not so. As Ele at Homepaddock notes, none of these changes will come into force before the election; John Key and National will campaign on the proposals, and leave it up to the voters to decide. And at the end of the day, isn't that why we have elections?

Let Labour continue to attack John Key. As Maurice Williamson noted in today's General Debate, voters care about two things; their hip pockets and the kids' futures. One day Labour is going to realise that their obsession with John Key isn't working; whether it's in time for the 2017 election is anyone's guess!