Robert MacCulloch and Leonard Hong: National's Plans for Compulsory KiwiSaver

The National Party’s KiwiSaver announcement is one of the most significant shifts in New Zealand politics and economic policy in a generation.

"We are delighted that the Prime Minister has agreed to implement compulsory KiwiSaver if re-elected in this year’s election."

"For the past few years, we have been advocating for compulsory savings through our opinion pieces, public commentary, and Leonard's postgraduate research from Singapore. We saw it as one of the most compelling macroeconomic policies that can help New Zealand become a rich, asset-owning country with deeper domestic capital markets and a stronger external position."

"The lesson from Australia’s compulsory superannuation system and Singapore’s Central Provident Fund is clear: mandatory savings can deepen capital markets, reduce the long-term fiscal burden of public pensions, and create pools of capital that support investment in national development."

"As presciently analysed by former Reserve Bank Governor Graeme Wheeler, New Zealand has for too long relied on housing wealth, high immigration, international tourism, and primary sector exports as the main engines of growth since the 2008 Global Financial Crisis. That model is no longer enough."

"In contrast to economic policies advocated by libertarians, New Zealand needs a comprehensive economic strategy to diversify its economy, and one approach is to develop greater domestic capital and expand public assets, including KiwiSaver and the New Zealand Superannuation Fund."

"The National Party’s commitment to KiwiSaver development signals an important shift in economic thinking. It recognises that New Zealand cannot build long-term prosperity under the status quo of heavy reliance on foreign capital, house price inflation, and chronically low household savings."

"For a centre-right government to accept compulsory KiwiSaver is a major philosophical shift. It recognises that personal responsibility sometimes requires strong institutions and pragmatic paternalism to incentivise higher capital accumulation."

"This unorthodox economic approach provides a more seamless pathway out of a fiscal crisis, and in stark contrast to rapid increases in taxation, monetisation of public debt, or harsh fiscal austerity measures."

"Today’s announcement by the Prime Minister is not the end of that debate, but it may be the start of a new economic consensus."

Professor Robert MacCulloch is the Matthew S. Abel Chair of Macroeconomics at the University of Auckland.

Leonard Hong is an Economist at the University of Auckland and the Prime Minister's Scholar for Asia.