The key changes that will impact our clients:
Kiwisaver
Disappointing approach taken to Kiwisaver, which I would have hoped would follow the Australian model, which has minimum employer contributions of 9%. Since inception the Australian super has raised over $1.28 trillion dollars and now Australians have more money invested in managed funds than any other country per capita.
The big changes
- Tax-free employer contributions will end from April 2012. i.e. employees will be taxed on their employers contributions.
- The government tax credit will be halved from $1042 to $521 from June 2012
- The compulsory employer contributions will increase from 2% to 3% from April 2013
While disadvantageous to employees, I’m sure most kiwis will propensity to inertia will stop them from leaving Kiwisaver. Something is better than nothing, but I still believe for personal wealth creation and New Zealand’s capital markets, compulsory Kiwisaver is inevitable.
Working For Families
High-income families (combined income $125k +) will be disadvantaged around $12 per week.
Early childhood education
$550 million more has been put towards ECE over the next 4 years
Benefits
The normal indexing of super and benefit payments has been made.
Economy
Treasury are predicting that an extra 170,000 jobs, and growth to peak at 4% in 2013.