Editorial: National’s KiwiSaver conversion is Labour’s historical victory

Saturday, 4 July 2026

EDITORIAL: Slowly and then all of a sudden, the National Party has dropped its long-held antipathy towards KiwiSaver, charging headlong into a compulsory savings system that would change the way New Zealanders save for retirement while delivering a decisive boost for the nation’s fund management industry and, over time, the wider economy.

On Monday, the party’s deputy leader, Nicola Willis, also the Minister of Finance in the coalition Government, participated in a seminar in Auckland on retirement savings, hosted by The Post, ANZ and Infrastructure New Zealand. Ms Willis, who delivered an assured performance, has clearly found the economic purpose she has been searching for since becoming Minister, beyond trying to slowly balance the books, as yet without success. Proposals to achieve greater competition in the banking sector have not yet delivered, sustained economic growth remains elusive, supermarket reform has delivered little.

But, in KiwiSaver, Ms Willis appears to have found a higher political and policy purpose.

For Ms Willis and her party, the issue is a political slam dunk. According to The Post/Freshwater Strategy Poll, around 70% of voters support compulsory KiwiSaver. Usefully for National, many of those who oppose it are likely Coalition voters already, making it an issue capable of expanding support rather than merely consolidating it. Whether it proves an electoral winner, however, is one question and ultimately less important. The policy itself, its implementation and its intergenerational endurance are much more important issues.

There is no free lunch. Instituting what is derided as a payroll tax by some on the right – including one of Ms Willis' predecessor, Ruth Richardson, in these pages – will impose significant additional short-run financial burdens on workers, including the self-employed, from 2032.

That is when, if implemented as planned, 12% of every employee’s wage or salary, split between employer and employee contributions, is planned to be set aside, locked away and professionally invested until retirement. But, Ms Richardson and others point out, those same workers will still be paying for the current New Zealand superannuation system. Although many view it as an entitlement, it is in reality a pay-as-you-go welfare scheme: today’s taxpayers fund today’s retirees.

The Post's tax receipt calculator suggests that someone earning $72,000 currently contributes about 2.7% of their income towards NZ Super through taxation. By 2032 that figure is likely to be slightly higher, while the same person will also be required to contribute 12% into compulsory retirement savings. That is close to 15% of income devoted to retirement funding. Someone earning $100,000 contributes around 3% towards NZ Super; someone on $200,000 contributes more than 4%.

A strong case could thus be made for more favourable tax treatment of savings that must be locked away for decades. Treasury has long disliked such concessions, and the Government would baulk at the cost, but there is an argument that people forced to fund both today’s retirees and their own retirement deserve some compensation for having their money quarantined. That would also require much greater fiscal discipline elsewhere in government than ministers have so far demonstrated.

Nor is this the only equity issue. National’s proposal clearly gives future governments the option of changing NZ Super itself. The current system has many virtues: it is universal, simple and largely free of the distortions that accompany means testing. Any move away from universality would need to be approached with extreme care and targeted only at those who demonstrably do not need an additional fortnightly payment from taxpayers.

It is worth remembering how Australia established its own compulsory superannuation system more than three decades ago. In partnership with then-Treasurer, Paul Keating, the then-leader of the Australian Council of Trade Unions, Bill Kelty, demonstrated extraordinary leadership in persuading unions to accept lower wage growth to help reduce inflation, with employers instead contributing to workers' retirement savings. It was a substantial political bargain. Both leaders earned their place as Australian statesmen.

National's embrace of compulsory KiwiSaver locks it firmly onto this path. The remaining question is whether Labour will follow.

KiwiSaver is one of Labour’s proudest policy achievements and now a central part of Labour mythology. Along with the landmark New Zealand Superannuation Fund, it was the brainchild of the Minister of Finance throughout the Fifth Labour Government, the late Dr Sir Michael Cullen, both to encourage private retirement savings and to provide somewhere to direct Budget surpluses that might otherwise have been spent. They stand alongside the welfare state, the removal of farm subsidies, GST, the Reserve Bank Act, good-faith bargaining and our globally integrated economy as a defining part of Labour's economic legacy over the 110 years since it was founded. Like Mr Keating in Australia, Sir Michael will long be remembered as one of our greatest and most visionary finance ministers.

On the face of it, that makes Labour’s current hesitation somewhat puzzling. Its leader, Chris Hipkins, argues that National will not be running Labour’s campaign. Fair enough. But securing, embedding and expanding for all time Sir Michael’s and Labour’s KiwiSaver legacy is surely is bigger than short-run campaign tactics. A century hence, historians will be in no doubt that it was Labour that led the way in securing sustainable savings and retirement policy in the half century since 1972 and its National Party opponents – until now – who have too often been recalcitrant.

For the country’s long-term benefit, The Post urges Labour to look beyond National’s half century of obdurance and support Ms Willis’ proposal, which also closely resembles NZ First's long-standing position. Retirement income policy works best when fundamentals are assured survival with changes of government.

New Zealanders have traditionally been more sceptical of compulsion than Australians, who are required to vote, save and even vaccinate their children if they wish to receive certain childcare subsidies. Compulsion sits less comfortably here.

It is also likely that Ms Willis and her party leader, Christopher Luxon, know there remain influential figures within the party who are deeply uncomfortable with this shift and who may quietly seek to derail it.

Ms Willis argues the party’s thinking has changed because both it and the world have changed. She is probably right. So too is the fact that so many New Zealanders now have close family members in Australia who have accumulated substantial superannuation balances and can see the benefits first-hand.

Overall, this is a forward-looking policy that recognises the political reality of retirement funding. Even if a future government sought to substantially pare back NZ Super, under MMP such a move would almost certainly be reversed by the next administration. The only durable way to ease the long-term fiscal burden is to ensure New Zealanders build much larger private retirement savings alongside the public pension.

But for that to happen, Labour will ultimately need to reconfirm its historic leadership position over a half century by coming aboard today. After it does, there is still important work to be done on the policy's finer details – regardless of who is next in Government. But the triumph of having slowly built the new national consensus on this most fundamental issue will always belong to Labour.