Odd to see in the Sunday-Star Times that the Government is looking at introducing compulsory superannuation savings, probably by making Kiwisaver compulsory. After all, this is the same government that gutted Kiwisaver and the Cullen Fund just a year ago, saying that super-annuitants were plenty well off and that saving for the future was a poor use of money. This is the same party whose leader, John Key, just two years ago was saying “New Zealand does not have a debt problem” yet here they are proposing to boost savings.
Hmm, have they seen the light? Somehow I doubt it. The Nats see compulsory super savings as a replacement for the universal superannuation we have now, not as an addition.
Compulsory super saving in addition to the government pension makes sense. As a country, we have failed to save enough, and the fault lies with individuals. The government has paid down its debt to the point where it had net assets for the first time ever until the recession came along and, even now, government debt is low and projected to peak soon. Individuals, on the other hand, used the good times under Labour to borrow, expecting that things would stay good forever. Now, we have one of the worst national debt levels in the world. Not only does that place us at risk in a future financial crisis, it means that every year we have to sell off more of our assets to make the interest payments on all that debt. We are becoming a country that lives to pay off its debtors – that’s the financial profile of a third world country, not a first world nation.
Various people have proposed a kind of national wealth fund that would combine money saved by compulsory super savings with the Cullen Fund, the SOEs, and individuals voluntary savings. This fund would be tasked with buying assets of strategic importance to the New Zealand economy, both here and abroad. Rather than putting short term returns first, it would be mandated to secure New Zealand’s economic sovereignty as the only real pathway to a wealthier future.
But I don’t think that’s the kind of vision the Nats have. If they have any vision of all, it is of replacing universal and equal government superannuation with compulsory super savings, which would mean that the rich retire with huge savings and the poor with a pittance.
Compulsory super savings are an answer but this government is asking the wrong question.