A group set up to find ways to increase national savings has delivered a grim picture of the economy, but the Government is not committing itself to any of the measures it says are needed to improve the outlook.
A group set up to find ways to increase national savings has delivered a grim picture of the economy, but the Government is not committing itself to any of the measures it says are needed to improve the outlook.
The Savings Working Group's final report, released yesterday, recommends automatically enrolling all workers in KiwiSaver, raising GST to 17.5 percent and introducing a special social security tax.
It told the Government it was spending at an unsustainable level, running large deficits and borrowing $300 million a week at a time when it was going face increasing costs from an ageing population.
The group's chairman, former BNZ chairman Kerry McDonald, said the report reflected an economy that had been deteriorating since the 1970s.
"It's as if New Zealand is standing on the edge of a cliff," he told reporters.
"Sudden events over which we have no control could cause a dramatic and damaging fall to the economy."
Prime Minister John Key said the Government wasn't going to raise GST or bring in any new taxes.
"They have identified the right issue -- New Zealand's level of foreign indebtedness is unsustainable and makes us vulnerable as a nation," he said.
Finance Minister Bill English said the report would be carefully studied.
"It's a matter of the Government picking up some of the measures to push people in the direction they're already going -- increasing savings and reducing debt, and locking that in," he said.
"We prefer measures that don't mean the Government has to dig into its own pocket."
Mr English said the Government was working on cutting its own spending.
"In some respects we are at the boundary of what's acceptable -- we are among the most indebted countries in the world, we are borrowing in volatile and grumpy financial markets and we wouldn't want to push too hard," he said.
"We've got a bank manager who is worried that our mortgage keeps increasing every year. In other respects we're in pretty good shape."
Labour's finance spokesman David Cunliffe said the report ignored the impact of dramatically cutting public services.
"Slashing billions of dollars from government spending and raising GST to 17.5 percent would make the recession worse and would be unfair to kiwis who are struggling the most," he said.
BusinessNZ said many of the recommendations should be serious considered.
"There is not a single silver bullet to rectify New Zealand's low wealth accumulation, but the majority of the recommendations, if implemented, would work together to improve the country's wealth position overall," said chief executive Phil O'Reilly.
