English says no plans to further change KiwiSaver

The Government is not planning on further major reform of KiwiSaver following tomorrow's budget changes, Finance Minister Bill English says.

He continued today to defend changes to the scheme which will see a reduction in the KiwiSaver tax credit, worth about $20 a week, which will be made up by higher contributions from members and employers.

"Because the Government has a very large deficit we don't think it makes sense to be borrowing all of the Government's commitment to KiwiSaver to put into people's savings account," he said at Printlink, in Petone near Wellington, where he watched the printing of his third budget this morning.

"The Government remains committed to KiwiSaver, it's got 1.7 million New Zealanders in it, and it's going to keep growing and I think by 2015 it will have something like $60 billion of funds in it."

However, that did not mean the Government would keep chipping away at the scheme, he said.

"We're making changes in this budget, we certainly wouldn't be planning further significant changes," he said.

"I expect that as the economy improves, governments will more likely to be looking at increasing the incentives rather than decreasing them."

Asked if it was time parties reached an agreement on the scheme so it would not constantly be meddled with, Mr English said any amendments down the track were up to future governments. He felt most parties would support tomorrow's changes but the public would see in the next week or two if any pledged to reverse them.

The Government's overriding need at the moment was to get finances under control, he said.

"Actually I think we've done a good job of nursing what was a pretty expensive scheme through the biggest recession we've had in a long time and the largest government deficit we've had in a long time."

The Government appeared unlikely to offer any tax incentives for saving.

"I think there's speculation about other tax incentives. In this budget there's no significant tax changes other than some changes to increase revenue to the Government where the details will be available tomorrow.

"Three will just be some tightening of the tax net but not affecting individuals, but relating to companies and banks."

Mr English said the overall focus was encouraging savings while also getting the Government's books in order.

"I think everyone now understands we've been borrowing $380m a week -- some weeks we've borrowed $1b -- and we simply have to get that under control and on a track to surplus and we are aiming to achieve that at the same time as supporting New Zealand households when times are tough.

"Three or four weeks ago we had a week where we borrowed $1b and there's been other weeks when its been $700m-$800m."

The Government was not looking at major welfare changes tomorrow but was continuing to work on that with changes to come later.

Most election year budgets offer treats to voters but Mr English was confident his zero budget would not cost votes.

"I think the public are in a mood to accept responsible and balanced decisions about getting the Government's finances under control, they know it's going to have some impact on them but they do expect the Key-led National Government to make pretty considered decisions and not harsh decisions."