Wednesday, October 08, 2008

How they're paying for it

National plans to give away far more money to the rich than Labour by cutting taxes. So, how do they plan to pay for it? Firstly, by canning the R&D tax credit [PDF]. Their research, science and technology policy [PDF] had previously said they would cut it, and distribute the money to universities and CRIs (on the basis they were better at research than business); now they're just killing it. Secondly, by ending government subsidies to employer contributions to KiwiSaver (something which was worth doing anyway - but see below). Thirdly, by promising to "control government expenditure" - which means sacking public servants (starting with MFAT). Overall, this gives them a slight saving on Labour's financial pathway - but its worth remembering that that's a financial pathway which includes all of those things. National is cutting services in order to get more money to hand out to their rich mates.

With Kiwisaver, the actual cut to funding won't make any difference - it was a subsidy to employers to do what they should be doing anyway, and a prime target for cutting. What will make a difference is gutting the scheme so that employers only have to contribute 2%, rather than it increasing to 4% over the next two years. They're also planning to allow employers to discriminate on the basis of membership in KiwiSaver, and effectively pay people less if they join, or rip their contributions right out of workers' pay packets. There are 800,000 KiwiSaver members - and National has just promised every single one of them a pay cut. I wonder which way they'll be voting in November?