Brad Olsen: Infometrics Principal Economist on the Government's alleged $700m hole in the Budget

Infometrics' Principal Economist says the Government's not entirely ignoring the lack of budget funding allocated for lifting KiwiSaver employer contributions. 

The Greens say the Government hasn't accounted for the cost to public services, which could cost more than $700 hundred million. 

Finance Minister Nicola Willis says that's being worked on - and will be in next year's Budget. 

Brad Olsen says the hole wasn't costed, but hasn't been forgotten. 

"There is a cost - it will have to be met, but it's not being directly disclosed in the Budget figures."

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Episode Transcript

Speaker 1 (00:00):
The fiscal hole is back again. This time it's from
the Greens. They reckon they found a seven hundred million
dollar hole in the government's twenty twenty five budget. They
reckon the government hasn't costed for the amount it will
have to pay its public service employees when the key
we save employer contributions go from three to four percent.
Brad Olsen is the principal economist Informetrics and been taking
a look at it.

Speaker 2 (00:18):
Hallo, Brad, good evening.

Speaker 1 (00:20):
So it's there, But is it a mini hole or
a maxi hole?

Speaker 2 (00:24):
Well, I feel like it's sort of a half talked
about hole in a sense because the government and Treasury
have noted some of the lack of costing effectively in
some of the fiscal Risks section of the budget update,
and that's only because the government doesn't want to prejudice
their position. They're going to at some point go into

(00:45):
negotiations with employees around this and other changes, and they
don't sort of want to have already said, well, look,
we've set aside all of this money and therefore that's
definitely how we're going to pay for it. So I
feel like it's a hole that sort of hasn't been
fully costed out, but certainly hasn't being completely forgotten about either.
The government has just got to work out over the
next couple of years as these changes come through, what

(01:07):
it effectively does to achieve it, just like I think
every other business across the country will be trying to
figure out. So there is a cost, it will have
to be met, but it's not being directly disclosed in
the budget figures.

Speaker 1 (01:19):
Brad, there is something to this argument. Isn't that that
now that you have to up your key, the employers
have to up the key. We say, a contribution from
the employer. The pay rise that you get next to
you or whenever this kicks in twenty twenty eight or thereafter,
is going to be lower.

Speaker 2 (01:32):
Yeah, that's effectively what the Treasury has estimated themselves. I've
said that they expect that, you know, I think something
like eighty percent of employers are likely to sort of
move in that way and figure out how to sort
of meet it. And I guess from that point of
view it might well be that, you know, the boss
the employers come out and say, well, look we were
going to give you, I don't know, a two thousand

(01:54):
dollars increase. We'll still give you that increase, but only
one thousand dollars of it will actually go to you
and your weekly pay. The other thousand is to meet
the additional contributions that we've got to make on your kiwisaver.

Speaker 1 (02:05):
That's I think.

Speaker 2 (02:06):
I mean, we see a lot of these conversations play
out across employees and employers and it will be a
horses for courses argument. Again, that's probably what the government
will have to do as well. They'll say, well, look
we're going to give you more pay. It's just that
more of your pay now gets saved as well. And
that's where it's all coming from. Sort of one total bucket.

Speaker 1 (02:23):
Okay, you have twenty seconds to tell me what your
problem with me is on superannuation, that we.

Speaker 2 (02:29):
Should approach superannuation like every other benefit we seem to
there's a bit of means testing. There's not all that
much universality in it.

Speaker 1 (02:36):
Okay, thank you very good. That was probably only like
seven seconds. Thank you, Brad brad Olson. Infametrics principle economs.

Speaker 2 (02:42):
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Speaker 1 (02:45):
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