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Labour’s Kiwisaver announcement

Written By: - Date published: 11:35 am, June 17th, 2014 - 202 comments
Categories: david cunliffe, david parker, labour, superannuation - Tags:

LEC CUnliffe January 27 2014 speech-4

David Cunliffe and David Parker have announced Labour’s Kiwisaver Policy for the election.  Details are here.  The headlines are:

  • KiwiSaver will be made universal for all workers apart from the self employed.  Students, beneficiaries and those with an income below a yet to be set level will be exempt.  Labour intends to continue with the growth in the minimum wage to maximise cover.
  • the $1,000 Kick-start and government contribution of up to $521 a year will be retained and will apply to all new enrollments.
  • The employer and employee minimum contribution rates will increase gradually by 0.25% a year for six years from 3% each currently to 4.5% in 2021.
  • As previously announced variable Kiwisaver contributions will be used as a tool to control inflation rather than just relying on interest rates, meaning people pay more into their savings instead of more in interest.

The justification for the policy is as follows:

New Zealand has chronically low savings. Many New Zealanders retire with little more than the government superannuation to live on. An increasing number don’t even own the home they live in. Without a savings pool, retirement can be about scraping by, rather than enjoying life.

Our small savings pool also means our businesses have to turn to overseas lenders and investors when they need capital to grow.

The result is that New Zealand has high international debt and a large part of our economy is owned by overseas investors. As a country, we send nearly $10 billion a year offshore in dividends and interest payments.

KiwiSaver is helping to turn this situation around. Our domestic savings are growing. Over $21 billion is now invested in KiwiSaver and over 2 million New Zealanders have joined the scheme.

But KiwiSaver is incomplete.

There are still around half a million wage earners who aren’t members. These are predominately people on lower incomes. They are missing out on receiving up to $521 a year in government support for their savings and matching contributions from their employer. This risks creating two classes of retirees: those who can live well by drawing on their KiwiSaver and those who only have government superannuation to fall back on.

Stand by as the right try and pick holes in the policy or suddenly develop a sympathy for the lowest paid amongst us.

202 comments on “Labour’s Kiwisaver announcement”

  1. Clemgeopin 1

    Some word or phrase seems incomplete in your last sentence of the 1st bullet point, I think.

    • mickysavage 1.1

      Oops should say “Labour intends to continue with the growth in the minimum wage to maximise cover”. Will correct.

      • Clemgeopin 1.1.1

        Sorry to be a pain here, but prior to that sentence, the word ‘yet’ seems missing too:
        below a [yet] to be set level.

        Better proof read again and please delete my two posts so that they do not interfere with other comments on the policy.

        [Corrected thanks. This is the trouble with having 5 minutes to post … MS]

  2. Colonial Viper 2

    WHY is Labour forcing NZers to put their hard-earned savings into private financial institutions, “investment managers” and Wall St, all of whom take their cut and gamble at no risk to themselves with the rest.

    Is there going to be a PUBLIC Kiwi Saver investment scheme which is fully backstopped against Wall St fraud and malfeasance, by the Government.

    Labour should make it so that people can invest directly with the high performing Cullen Fund, and bypass the private sector fund managers entirely.

    Will this increased compulsory saving in KiwiSaver make it easier or harder for people to make their mortgage payments as interest rates continue to rise.

    • The Al1en 2.1

      “Labour should make it so that people can invest directly with the high performing Cullen Fund, and bypass the private sector fund managers entirely”

      Good idea. I’d be in.

    • Lanthanide 2.2

      “Labour should make it so that people can invest directly with the high performing Cullen Fund, and bypass the private sector fund managers entirely.”

      Yes, very good idea, although any move to do this would necessarily reduce the return of those in that segment of the fund, because managing a retail scheme has significant overheads compared to a wholesale one that is answerable only to the government.

      Actually this is one of Winston’s policies that he came out with a while ago, but he was claiming that it meant the public could have a “fee-free” kiwisaver option, which I rubbished at the time with language similar to the above (you could do a search here and find my comment).

      There are also actually structural problems with using the Cullen fund as a vehicle, because their investing time period is very specific, in that the fund will start being drawn down in 2030 to pay for superannuation. It’s also not necessarily a good idea for individuals to lump all their eggs into the same public basket – better to diversify your savings.

      • Colonial Viper 2.2.1

        Yes I remember that conversation Lanth and you did make solid points. I thought it was worth exploring further and possibly has the potential to be made into a very popular option amongst savers.

      • alwyn 2.2.2

        The Labour Party had better not increase the contributions required by an employer or employee too much in a compulsory Kiwi Saver scheme if you really want to encourage diversification of savings then, particularly if they are still proposing to go ahead with the incredibly poorly conceived idea of varying the contribution rate to control inflation.

        At the moment they are proposing that 9% of an employee’s remuneration should go into the Kiwi Saver scheme they have chosen. That is probably as much as anyone would want to save toward retirement and it is all going to be in a single egg in a single basket, unless they are going to allow people to have more than one Kiwi Saver scheme. At least as summarised here that doesn’t seem to be intended.

        • Tracey 2.2.2.1

          At the moment many employers are effectively opting out by making salaries inclusive of employer contribution… So what do you mean by “too much” and how is national dealing with the perpetual problem of private saving?

          • alwyn 2.2.2.1.1

            There is considerable doubt among economists as to whether we really do have an under-saving problem, at least as it applies to saving for retirement.
            An example of discussion on the problem is the following paper

            http://econpapers.repec.org/paper/nztnztwps/04_2f12.htm

            There are a variety of other studies on the matter, including work by NZIER which agrees with this.
            The people who mostly complain about the subject are fund managers, including people running Kiwi Saver schemes who want to get their hands on the money which people will be required to save.

            There are also many economists who consider that people contributing to Kiwi Saver do so as an alternative to other saving, not in addition to it. Thus there is no net increase in peoples savings. For example I joined Kiwi Saver simply to get the taxpayer benefits. I wasn’t working and only had to stay a member for 5 years. Any money I put in simply came out of savings I had already made.

            As far as the employers actions I think you may assume that this will be the norm if it is made compulsory. It may not be stated up front but it will be a consideration that the employer is taking into account. After all the employer is basically interested in how much it will cost to employ someone to do a job and that does include their compulsory contribution to a super scheme. It isn’t really any different to a person getting an employer supplied car as a salary sacrifice is it?

            As far as “too much” the back of envelope calculations that suggest increasing contributions by 6% as an alternative to a 1% increase in the OCR seem reasonable. Certainly the Labour Party have made no attempt to refute the calculation. This could easily mean a 15% of salary package going into a Kiwi Saver scheme for everybody that belongs.

            People are unlikely to save anything else and therefore there will be no diversification of their savings at all.

    • Ian 2.3

      Yep – my thoughts exactly

    • Macro 2.4

      My thoughts entirely! This is a crock if it is to be based upon Private financial institutions.

    • Chooky 2.5

      CV +100…clearly Labour need to add more to this policy :

      1) to make people feel their precious savings are secure and not subject to overseas corporate raiders

      2) to put in money for those who cant afford to themselves eg unpaid care givers at home, the unemployed , those on very low wages struggling to survive…

      …otherwise I dont think this will fly for Labour …..and NACT will be scare mongering and have a turkey shoot

      ….the result will be to put off Labour voters voting for Labour ! …. just as the high retirement age ( higher than Nacts) for the pension will put them off !

      Labour need to get a grip here …good in theory but a marketer should be able to tell them whether it will cost them votes which they cant afford to lose

  3. Bifter 3

    This is it. Finally the game changer we have been hoping for.

    Ever since Cunliffe beat those two class traitors in the leadership race I knew that he would come good. To be honest my faith had been tested by his decision to surround himself with morons but it seems he has either given them the boot or is discounting their advice.

    [lprent: I don’t think that you are sincere about your stated opinions. You look like an briarpatch astroturfer to me. Adding you to automoderation so that I can examine you more closely. ]

  4. Colonial Viper 4

    The result is that New Zealand has high international debt and a large part of our economy is owned by overseas investors. As a country, we send nearly $10 billion a year offshore in dividends and interest payments.

    The big Australian banks are responsible for perhaps 45% of this $10B being taken offshore every year.

    I am struggling to see how feeding up these largely foreign owned financial institutions and the financial sector as a whole is going to help NZ overcome our current account deficit unless it is done purely with NZ Government bonds and similar 100% Kiwi investment vehicles.

    I think the idea of a variable enforced savings rate to help control inflation and monetary supply is excellent; but there are other major problems with the scheme as it is laid out – especially as I cannot clearly see how these additional worker savings will be kept in NZ and not flow out anyway to Wall St etc.

    • Rosie 4.1

      CV, a serious question (banking knowledge isn’t my strength) Can the government intervene and make our state owned bank more appealing to folks looking for a place to set up their kiwisaver account? And would this even keep the money on shore anyway?

      I’ve been with Kiwibank since they opened mainly for the reason that we own it. However Kwibank is steadily looking more and more like foreign owned banks, except that they do have lower fee’s. Should there be more of a draw card for NZer’s to bank with Kiwibank and would it make a difference to the issue you mention above?

      • Colonial Viper 4.1.1

        CV, a serious question (banking knowledge isn’t my strength) Can the government intervene and make our state owned bank more appealing to folks looking for a place to set up their kiwisaver account?

        There are many ways that the Government could slant the field toward KiwiBank, but the overseas owned financial sector would complain bitterly.

        What comes immediately to mind: turn Kiwi Bank into a mutual bank where customers get a cut of the profits of the bank at the end of the year. Have a policy which says that money with KiwiBank goes straight back into the community to help local businesses and organisations with cheap loans.

        And would this even keep the money on shore anyway?

        Well, the distribution of the end of year bank profits would stay in NZ at least.

        • Lanthanide 4.1.1.1

          “What comes immediately to mind: turn Kiwi Bank into a mutual bank where customers get a cut of the profits of the bank at the end of the year. ”

          I’ve honestly never understood this. Bank profits primarily come from fees. I don’t see how I could receive more bank in profit than I paid in fees, unless someone else is paying more in fees than they get back in profit. What incentive is there for that person to stick with the bank if they’re paying high fees?

          • Colonial Viper 4.1.1.1.1

            I guess it would be like Westpac distributing back out to its customers its $1B in profits, instead of repatriating those monies back to Australia.

            Where you might eventually come out ahead if the bank builds up a solid portfolio of income generating investment assets…

        • Rosie 4.1.1.2

          Thanks CV. An interesting option. I’d be into that. And lets not care about the overseas owned financial sector complaining bitterly if we were to go ahead and be proactive about taking care of ourselves. They are no different to feudal overlords and need to be put in their place.

        • Tracey 4.1.1.3

          tsb is also nz owned

      • Lanthanide 4.1.2

        The KiwiBank KS fund is a bought-and-rebranded Gareth Morgan KS fund (which I’m a member of).

        If you like KiwiBank because it’s owned by NZ, then you may not like their KS fund, because it almost exclusively invests offshore. Their rationale being that most NZers have the vast majority of their assets in NZ (eg house, car, etc) and so by investing overseas they offer diversity and protection to their NZ-based customers.

        • alwyn 4.1.2.1

          Gareth used to hold the view, and may still do so, that if you have a job in New Zealand you shouldn’t have any other assets at all here. You shouldn’t even own a house.

          Incidentally the worst of all investment decisions a person can make is to buy shares in the company that employs them. If the company gets into difficulty you are likely to lose both your job and your savings at the same time.

          As far as Kiwi Bank paying out profits to its customers the difficulty is that it doesn’t really have enough money to do so. I don’t think, from memory, that it has ever paid a dividend as it is always requiring more capital from retained earnings. I don’t think the state putting in extra capital so the bank could immediately pay it out to its clients would appeal to even a finance spokesman like Parker. Norman might be a starter of course.

          • Tracey 4.1.2.1.1

            mutual societies work in health insurance and general insurance too.

          • Tracey 4.1.2.1.2

            there is interesting research on profit sharing with employees.

            Funny how shares and bonus are deemed to “work” for ceo’s even when they fail

          • geoff 4.1.2.1.3

            Didn’t gareth Morgan’s kiwisaver company do really poorly? I think I’d rather listen to his son for investment advice than him.

    • Chooky 4.2

      The Greens have a good policy on Oz Banks…(maybe someone could do a posting on this ?)…it is to get rid of Australian Banks I think …or at least OZ banks taking billions out of New Zealand in profits

      • alwyn 4.2.1

        Do you have a reference to this policy you talk about?
        It sounds much more extreme than anything I’ve heard about them.
        In their policy material all I can find is this

        “4. Keeping it Kiwi (Kiwibank and other NZ owned Banks)

        The Green Party will:
        1. Retain New Zealand government ownership of Kiwibank.
        2.Support measures to strengthen Kiwibank to balance the foreign ownership of New Zealand’s other major banks. We will encourage Kiwibank to strengthen its banking division, and allow it to retain its profits in order to do so.”

        This sounds a great deal more limited than what you are suggesting and there is certainly no mention of getting rid of foreign banks.

      • dave 4.2.2

        theres a really good documentary from pbs the retirement gamble on the 401k system
        short version is fund managers are robbing bastards and fees are the killer i hope nz first and greens can twist labour towards there policy’s on kiwi saver

  5. Bill 5

    So this idea from ‘the left’ is for wage slaves to invest a portion of their wages with their exploiters, who can then make money from it, with the idea that they (the wage slaves) can claim a cut if they live long enough…and the gamblers don’t go belly up (again). Good-o.

    • Lanthanide 5.1

      “can claim a cut if they live long enough…and the gamblers don’t go belly up (again). Good-o.”

      1. Kiwisaver goes to your estate if you die, and can be withdrawn for other reasons such as terminal illness, permanent emmigration, financial hardship etc.
      2. You are free to choose a “cash-only” investment that invests solely in bank term deposits and other liquid assets. The only safer option would be to stash cash under your bed, but that isn’t actually “investment” so much as “hoarding”.
      • Sabine 5.1.1
        1. One needs to have an estate….if one is childless/family less the government is laughing all the way to the bank.
        2. It might be fiscally more sensible to pay of existing debt (charged at current usury rates of 17.9% – 19.9%) to the tune of what (in my case) 250 +$ a month, than “save” with Kiwi safer which is dromant and serves me not should I need it.
        3. It would be way more attractive if the “Saver” is given the option of withdrawl througout their savings period. I.e. every 6 years up to 35% can be withdrawn no questions asked, and the “Saver” then could use it for mortgage payments, studenloans or a set of new teeth if needed.
        4. Will we here the same bs. we are hearing now about insolvency when the current 20 years go retire in 50 years and the banks that were entrusted to ‘invest prudently and fiscally commercially” and bo fucking hoo the money aint there, cause redux 2008?

        Nope, sorry Labour, you aint getting my tick of approval on that.

        This to me is nothing less then legalised wage theft.

        • Lanthanide 5.1.1.1
          1. Which is no different to any other asset owned by someone if they died and it goes to the government. There’s nothing special about it being in Kiwisaver except that you didn’t get to spend it at the time, but suggesting that you expect to die before you turn 65 isn’t really a sensible objection. Also if you have a will then the Kiwisaver amount would go to whomever that specified, regardless of your familial situation.
          2. Courts have recently upheld that creditors cannot access your Kiwisaver funds, so for those in a particularly bad debt situation, KS could be a silver lining. Similarly companies lending credit will take your post-KS income into account, so fewer people may get into bad debt situations if they can’t get the loan to begin with.
          3. It’s designed to be a savings scheme for your retirement. If you take it out early, then it’s not serving that purpose. Eventually the state superannuation is going to have the entitlement raised and the value is likely to be reduced, either through inflation, a direct cut, or through means testing.
          4. Probably. But that’s a wider problem than just KS.
          • Lanthanide 5.1.1.1.1

            Also on #2, if you’re in employment (which are those for whom KS is going to be compulsory), then your employer has to chip in the same amount of savings too (minus the thieving tax this National government introduced to these contributions). So a 67%+ return on the savings deducted from your wages is likely going to surpass most other debt-repayment options you have, anyway.

            • The Chairman 5.1.1.1.1.1

              Employer contributions are likely to come at the expense of employee wage increases or price hikes (inflation).

              • Lanthanide

                Under the last Labour government this wasn’t legal. Under the current National government it is.

                I wouldn’t be surprised if the rules were reverted to how they were.

                • The Chairman

                  Perhaps, but it is something Labour should clarify. Moreover, that won’t address price hikes and will most likely drive employers to them.

        • Tracey 5.1.1.2

          one needs to have a will. Fify

          Government doesnt get it just cos you have no children or family. You can distribute your estate however you like through a will. You can even write the will yourself, no lawyer required.

        • dave 5.1.1.3

          usa the 401k have a massive shortfall due to wall street greed !

    • emergency mike 5.2

      My feeling too Bill. ‘Pension funds’ are targets for raids by the corporate elite when they need it. For the um, stability of the banking system, you understand. Or maybe for some noble ‘market making’.

      Not impressed.

      • Colonial Viper 5.2.1

        Yep, watch out for new bank “bail-in” plans now in place all over the world including NZ. Cypruss set the example – unscheduled bank holidays were held and depositors had monies removed straight out of their bank accounts in order to help the banking system stay afloat.

        • nadis 5.2.1.1

          Why the issue with bank bail in? Is there a universal law that says banks must be immune from default? Ignoring systemic risks for a moment, a bank is a corporate body and deposits are one form of funding for that corporate. Bank goes bankrupt, then assets are distributed in order of priority with deposit holders first (or second after IRD).

          Now the systemic issues are best served by a system like the US has where the first 100k of individual account is guaranteed. But in principle a bank is no different to any other corporate, and investors in banks including depositors are taking investment risk on their deposits.

          Cyprus had a whole lot of other issues – the bail in was driven to a large degree to punish the money laundering capital of Europe – half the deposits in Cyprus were from Russian entities. The alternative for Cyprus was depositors losing 100% of their deposits rather than what happened. From memory I think only depositors in one particular bank were affected, deposits up to EUR100,000 lost nothing but balances above that effectively became equity and would lose prob 40%. But the alternative was to lose everything in a disorderly default.

  6. s y d 6

    universal = compulsory

    as if this is giving, not taking.

    as if it’s our fault that all our shit has been sold, cos we didn’t put enough of our meagre wages in the bank. wasted that cash on food and clothes and a packet of durries.

    naughty people.

    we are not at war with eastasia.

  7. Rosie 7

    Good to know these details – helps us plan in the (hopeful) event of Labour winning the election.

    I’ve got no problem with a compulsory kiwisaver if it benefits the country and the individual, and on the whole support such an idea, (and the exemptions) however I’m still worried about affording it. I see the policy would kick in, in October 2015. If interest rates keep rising between now and then how can anyone but the very wealthy cope? Will interest rates be in check by that stage?

    Our mortgage has just gone up by $50 a week (and thats after a good healthy haggle) which left us going from tight to uncomfortably tight, like a pair of jeans that have been through the wash and shrunk. What will our situation, and that of thousands of others be like by 2015?

    • Lanthanide 7.1

      “Our mortgage has just gone up by $50 a week (and thats after a good healthy haggle) which left us going from tight to uncomfortably tight, like a pair of jeans that have been through the wash and shrunk. What will our situation, and that of thousands of others be like by 2015?”

      Hopefully you had the good sense to fix your mortgage rate, particularly with one of the attractive 2 or 3 year rates at the moment?

      Broadly I would suggest voting in Labour with their policies to reduce the cost of electricity and put up the minimum wage (which will stimulate the economy) will benefit you. The Green’s carbon tax cut would be more money directly in your pocket, too. Car registration is set to be reduced next year (would have been this year except for Nationals vaunted “surplus”).

      Finally you should start considering what additional sources of revenue might be available to you – odd jobs or perhaps renting out a room.

      • Rosie 7.1.1

        Yes, Lanthanide, we refixed. We simply couldn’t afford to go the 3 year option and have split the loan into 1 year fixed at a cheaper rate and a slightly higher rate for 2 years, with our fingers crossed that my health will recover and I will be able to work again before then. As it is I am looking for part time work but not getting any interviews. (Believe me, we’ve considered other alternate sources of income!)

        We’ve only had the mortgage for 2 years and had a low deposit hence the steep increase. We’ve always had our mortgage on a fixed rate and as rates went down I simply refixed on to the lower rate and negotiated the refixing fee to be halved or even waived in one case.

        Any yes it is two ticks for Labour this time around. Party vote and here in Ohariu we need to get rid of Dunne so the Labour candidate is also getting my vote :-)

    • john 7.2

      Mortgage rates have just gone up 0.25%. If your mortgage has gone up $50 a week, that means your mortgage is over a million dollars (of have you just come off a fixed rate).

      If that’s the case, best to downsize and get something smaller, to save yourself in case they go up to 11% like they were in 2008.

      Rates are still close to all time historical lows – it’s not realistic that they’ll stay this low in the medium or long term.

      • Rosie 7.2.1

        Hi john. No I do not have a mortgage of over a million dollars lol. Please see my response to Lanthanide above.

        Our house is a perfect size for the two of us. I will not be downsizing. Not after living in shitty damp flats all my life when I’ve finally got a lovely sunny well insulated double glazed decent home. I’m not going anywhere!

        It’s not me that has the problem, it’s our greed driven banking system.

        • john 7.2.1.1

          The banks don’t hold a gun to our head and make us pay stupid prices for houses priced way above what they’re worth.

          That’s down to collective stupidity.

          House prices in many places are way above what they’re worth. The rental returns are appallingly low, and can’t go much higher – wages won’t allow it.

          We looked at buying a rental in 2005/6/7 but the returns simply didn’t justify it. The only return would be if the overvalued purchase price became even more over valued because enough people naively believed the bubble will continue to expand.

          In the long term, most people can’t afford rent or mortgage payments that increase at a higher rate than their wages go up, which is only slightly more than the CPI.

          • One Anonymous Bloke 7.2.1.1.1

            What’s that smell? Ah, sanctimony.

            • john 7.2.1.1.1.1

              Oh great – a stalker.

              • One Anonymous Bloke

                :twisted:

                Well what do you expect, making daft assumptions about Rosie’s situation then compounding your mistake with beard-stroking platitudes?

                This constructive criticism is brought to you by the Campaign for Better Wingnuts.

          • Tracey 7.2.1.1.2

            comparing your failed foray into an investment property with rosies home is interesting.

            You voted labour in 2008 didnt you john, you know cos at 11% that showed how well the economy was doing… And the 18b debt a third of tge size now. You couldnt possibltility have voted against that?

            • john 7.2.1.1.2.1

              Deciding not to buy into an overpriced bubble, just before the bubble bust, is a failure?

              • Tracey

                Cmon john no one here believes youdidnt buy cos of your prediction of a bursting bubble… Which in aucklandwas oh so temporary.

                How about addressing tge other parts of the post..dont worry bout it, those ready see through you.

          • Rosie 7.2.1.1.3

            “The banks don’t hold a gun to our head and make us pay stupid prices for houses priced way above what they’re worth.”

            What makes you think I paid for a house well above its worth? Where have a I said that? You don’t even know my situation, as has been pointed out by OAB and Tracey.

            For your info I spent 6 months finding the right house that wasn’t over valued for the reason that I didn’t want to waste a single cent and line the pockets of others. The house I bought 2 years ago was 2 years old at that point and the purchase price was the same as what the previous owners paid. Since then building costs have gone up so I have no qualms about what I paid.

            “In the long term, most people can’t afford rent or mortgage payments that increase at a higher rate than their wages go up, which is only slightly more than the CPI.”

            Thats not the fault of the people is it? What do you suggest people do? Suck it up and live in crappy rentals for the rest of their lives?

            • john 7.2.1.1.3.1

              Rosie says “What makes you think I paid for a house well above its worth? ”

              I was talking collectively, which is why I said the reason was collective stupidity.

              Rosie asks “What do you suggest people do? Suck it up and live in crappy rentals for the rest of their lives?”

              Right now renting a house (crappy or nice) is often cheaper than owning it.

              There’s plenty of sites do the comparison. Interest.co.nz says it’s still cheaper to rent,
              ” Conclusion: On a national basis, we think it is now clearly better to stay renting than buying.”

              http://www.interest.co.nz/property/rent-or-buy

              Housing in Auckland has been overpriced for around a decade now.

              The point about people not being able to afford rents or mortgages, was that house price increases are not sustainable – they can’t just keep going up and up much faster than wage increases.

              • One Anonymous Bloke

                Says who? When I say your credibility is at an all time low I don’t mean to imply you’ve ever had any.

              • geoff

                Who says they cant, if wealthy immigrants keep buying them and speculators reinforce that. It doesnt matter if the wages of kiwis keep going down as long as relatively wealthy people keep entering the country.

              • Rosie

                Hey john, guess what, after renting houses from age 17 until 42 I know that renting is cheaper and yes, we all know that both rent and mortgages are going up faster than wages, so theres a problem right?

                So saying that “collective stupidity” is contributing is unhelpful. People chose to buy a house for many different reasons and they SHOULD be able to buy a house if they chose to, but not everyone can and some of those that do buy, struggle. Because we have a banking system and currently a government unwilling to intervene in the problem of housing unaffordability does that make it acceptable?

                You are suggesting that we should just tolerate what the market dictates and rent even when we no longer want to.Sounds pretty lame to me. So back to the idea of Kiwisaver and it’s counterpart interest rate control, I’d rather see a government doing something and making an effort than see a government such as ours that stands by and doesn’t give a toss about people’s lives.

          • framu 7.2.1.1.4

            “The banks don’t hold a gun to our head and make us pay stupid prices for houses priced way above what they’re worth.”

            your shifting goalposts john

          • Anthony Bull 7.2.1.1.5

            You didn’t seriously look at buying a rental then, as I bought a new 400k apartment (with a $0 deposit using equity leveraging) in Wellington in 2007 and its making $1000 a month positive cashflow/gross profit now, and I will never have to put another cent into it.

            When I retire in 30 years time, it will have paid its loans off, have made considerable capital gains and after tax there will be about $400k sitting in an account to use also. Or I may leverage it to buy a second rental in the next ten years, then repeat and rinse.

            If you had done your homework back then you would be away laughing at the moment.

        • dave 7.2.1.2

          the problem is most of us have paid far to much for homes that were a few decades ago in line with domestic incomes but with bankers pushing cheap credit faster than a drug dealer the country is sitting on huge dept bomb that to large extent only needs a few bases point increases to blow up adding to fire we have massive money printing in china europe and the us which is spilling over into our market in form of excess asset price inflation its not good !!!!when it pops its not just going take down those in debt its going affect all of us .

  8. Dave_1924 8

    So:

    What is the undefined lower limit where compulsion doesn’t set in?
    Why would I want to put more fees in the hands of the Funds Management Industry – they make a fortune already?
    How safe will my KS balance be from Government borrowing to fund their little schemes?

    • Lanthanide 8.1
      1. I’m sure they have a feeling for what the number will be but nothing concrete right now. They already talked about raising the minimum wage so that more people will be able to contribute, which suggests that those on the minimum wage won’t be compelled to join. Hopefully they will be able to share the number before the election, but it must be remembered that the Opposition does not have access to the same kinds of resources that the government has for when it constructs and researches policy.
      2. Sure, no one voluntarily pays fees without receiving something in return. So what you receive in return is a KS fund, including $1,000 government contribution, $521 “tax credit” top-up annually and matching contributions from your employer. You are also free to choose a low-fee fund that invests solely in cash assets. There is (finally) a comprehensive comparison website here: http://fundfinder.sorted.org.nz/
      3. As safe as anything can be in a country where the Parliament is sovereign and can write new laws at any time it pleases. The government is ultimately only answerable to the voting public. KS is currently legislated to be the private property of the fund holder and the government has no access to it; any more so than the government would have access to your private bank account.
      • Sabine 8.1.1

        1, So the minimum wage goes up? How much? From $ 13.75 ro $ 14.25? That is not even keeping up with raising rent, food and transport costs.

        How much would the minimum wage actually have to go up to really make a dent and get peeps of government support, as I really do believe that the current minimum wage is only governmental sponsored corporate welfare. No one in this country anywhere can live decently on $ 13.75 before tax.

        2,I have no issues with paying fees for a service….however I have an issue paying income tax on interest, especially if my savings and my savings rate is dictated.

        1. If the government can legislate that participation is compulsory that the Government must take responsability when the private property managers of the fund holder fuck up and gamble the lot away. (see the much glamourised s401k funds in the states….they did not do well in the big financial mess of 2008 and many retirees and soon to be etc have lost what they thought were their savings).

        and for what it is worth, the government can and has access to our bankaccounts

        Remember Crete
        http://greece.greekreporter.com/2013/03/16/cypriots-frantic-as-bailout-hits-bank-accounts/

        and the reaction of dear Leader

        http://www.radionz.co.nz/news/political/130845/govt-dodges-clear-answers-on-bank-bailout-policy

        so quite frankly, no If this policy would come from National i would scream Poison, it coming from Labout does not make it better.

        disclaimer….I have a Kiwisaver, and have been part of it since it started. I have no issues with saving schemes, I have issues with compulsory/legislated savings rate that are not guaranteed.

        As for an earlier payout, or smaller payouts throught a Life, a young on might be on that kiwi safer for 50 odd years considering that the retirement is going to be raised. (this is the way it is handled in Germany btw. where the due date is every 6 years, and a person can take all, or some or nothing out, and just simply continues contributing)

        During this time, the need may arise to dip into your savings to a. pay for some medical costs, buy a house, pay off a student loan, has a child or two, or has been unemployed and needs the money because WINZ is not helping. etc etc. You might say it is not prudent, but it is also not prudent to have a Loan at 20%….now the government could legislate that the maximum interest charged on any loan is something like 10% ….but it aint doing it?
        As the KS scheme has a provision for Hardship and oversees move etc, it could be made simple by providing People with the right to just simply withdraw every 6 years, instead of having to argue with a Bank person that really my medical needs, or my family needs are such that I need to access what is MY MONEY!

        So to cut it short, if it is to be made compolsury it needs to have guarantees, or else it is legislated Wage theft, as the person paying into the scheme has less spending money.

        Also, we need spending, so to take even more money out of circulation to save for “retirement” aint gonna be helping the economy.

        another disclaimer, i will be voting for my Labout MP, but the Party Vote goes to Green.

        • Colonial Viper 8.1.1.1

          Minimum wage is already $14.25; Labour propose to raise it by a whole 75c/hr upon taking office. And then to transition to a Living Wage – over a few years.

      • The “comprehensive comparison website” really isn’t, unless the only things you think matter in an investment are fees, returns, and “what customer services” they provide.

        I’ve been looking today in anticipation of Labour implementing this policy in 2015, and my criteria are:

        • how little I can get away with having in markets
        • how much of what is invested in markets is in New Zealand-based companies
        • how a fund determines the social and environmental benefits of the products it invests in.

        Yet this information is apparently impossible to get, and from what I can find, one of the most-touted “ethical” investments, the Kiwibank fund, is almost entirely invested overseas.

        If I’m to be forced to save (in a way which long-term hurts me financially, though it won’t cause me anywhere near the kind of hardship it will to others) then I should have the right to choose where my money is going without having to read the fine detail of a dozen investment statements.

    • fisiani 8.2

      Safe with the Greens in government. Of course not. Don’t be naive. Your funds will be forced into Green initiatives that the private sector know to be unprofitable.

  9. I take it that “universal” is the new weasel word for “compulsory.”

    • Te Reo Putake 9.1

      Only if you’ve never previously heard of national superannuation, Liam.

      • Colonial Viper 9.1.1

        You can opt out of National Super by not filling out the forms, TRP.

        • Liam Hehir 9.1.1.1

          I would have used “universal” if participation in Kiwisaver had been limited to employees of industries, ages or on needs basis. A more straightforward description of this policy would be that it will make Kiwisaver “compulsory” or “mandatory”.

          Don’t get prickly, I’m not saying Labour is the first or only political party to engage in euphemism.

          • Te Reo Putake 9.1.1.1.1

            It’s not an euphemism, Liam, it’s part of the jargon of superannuation and has been since pensions were first proposed over a century ago. But, yeah, sorry for being prickly. Had to deal with an idiot earlier in the day, some of the bad vibe must still be harshing my buzz.

          • McFlock 9.1.1.1.2

            lol
            So you think it would be “universal” if it didn’t apply to everyone?

            :roll:

            • Liam Hehir 9.1.1.1.2.1

              It would be “universal” if it was open to everyone. We have “universal” healthcare – it doesn’t mean I have to have the operations the hospital recommends. I have a right not to consent.

              You can apply for superannuation and 8 weeks before you turn 65. Because it’s universal, you have a right to do so.

              Nobody forces you to take the money. It’s not mandatory.

              • McFlock

                So?

                According to many tories, unemployed people choose to not work. Therefore nobody makes them work, therefore nobody forces them into kiwisaver, therefore it’s only “universal” not “compulsory”.

                • But by that logic there’s no compulsory seatbelt law for motorists or compulsory helmet law for cyclists, since not everyone is compelled to use those vehicles. You would instead be talking about a “universal” seatbelts or helmets. But I can’t think of anybody who would naturally use that awkward construction.

                  For example, would you describe GST as being “universal” rather than “compulsory” just because it’s paid as a result of theoretically voluntary economic activities?

                  Bottom line: employees may currently choose whether or not they participate Kiwisaver. That choice is being removed. The fact that this may be a good idea (and it may be a good idea) does not mean it’s not, in essence, a move to compulsory Kiwisaver.

                  • Te Reo Putake

                    You’re still missing the point, Liam. It’s perfectly fine to use the layman’s term ‘compulsory’, but when talking about pensions and superannuation, it’s normal to use ‘universal’. I even heard RNZ say ‘workers would be “forced” to sign up’. That’s a pretty harsh way of saying the same thing, but at the end of the day it’s not the language that’s the key thing.

                    I’m heartily sick of seeing working class kiwis get to the end of their working lives with nothing to show for a lifetime of labour. Kiwisaver has the potential to end that inequity and, even better, makes employers contribute too. OK, it’s too close to socialism for some people, but fuck ‘em. I want to see our older workers have genuine choices in their latter years and having both a pension and an employer and government subsidised super scheme is a better option than doing fuck all.

                    • Except for when we had a referendum on the matter in 1997 right? What was that called again? Oh yeah, the the “Compulsory Retirement Savings Scheme Referendum” in which about 92% of voters then rejected the “Compulsory Retirement Savings Scheme”

                      If it’s worth anything to you, I’m not making a value judgement on the policy. I’m fairly conservative – and inclined to be opposed to the policy. However, I am also a convert to Kiwisaver in one form or the other. If we must have some socialism, then we can agree this is a more agreeable form of it. So it’s an not an invincible inclination by any means.

                      Assuming Thomas Picketty is right, and investment income vastly outstrips every other form of income, then Kiwisaver can theoretically reduce inequality by making investment easier. Assuming people are in it long enough, it could even build capital over generations.

                      All that being said, I don’t think we should paper over the fact that this is an essentially coercive action. Currently, employees have the right to have a personal investment account through Kiwisaver. Labour want to make it compulsory.

                      It should be described as such – for the same reasons as proponents of asset sales shouldn’t hide between the “mixed ownership model” and the Obama administration shouldn’t hide behind “overseas contingency operations”.

                    • Colonial Viper

                      Investment income is falling world wide (with the exception of rentier forms of capitalism cornered by the oligarchic class). Bond yields suck due to ZIRP. Stock markets are skyrocketing due to QE – but that is already badly faltering. Consumer demand in western countries is falling over – due to austerity and stagnation.

                      And we are slowly moving into the steeper end of energy depletion. Which is the final nail in the coffin of the “economic growth” that investment returns need to eventuate.

                    • Te Reo Putake

                      “Except for when we had a referendum on the matter in 1997 right?”

                      Wrong. That referendum was on a specific scheme that was pants. It was rejected because the scheme was no good, not because people didn’t like the idea of compulsory retirement savings. In fact, the best example of our attitude to the matter was the ’72 election where we voted en masse for Norm Kirk to bring one in. Which Muldoon knackered a few years later.

                    • Ok – but it was still called “compulsory” right? Rather than a “Universal Retirement Savings Scheme”

                    • McFlock

                      Instruction from crosby textor:

                      your next semantic diversion will be whether Labour’s proposal is a “retirement savings scheme” or a “pre-death endowment sequestration” [preferred].

                    • Okay, that’s quite funny.

                      But to legislate to make what compulsory is currently a choice and instead call it a “universal” program reminds me of that episode of the Simpsons where the President renamed [her] tax hike a “”temporary refund adjustment.”

                      Moe: Refund adjustment? Hey, sounds good to me.

                      Lenny: Sure beats a tax.

                    • McFlock

                      But to legislate to make what compulsory is currently a choice and instead call it a “universal” program

                      But to legislate to ensure everyone does what not everyone currently does is also to make it “universal”.

                      Each term is as accurate as the other in this instance. But you seem to take odd connotations from “universal” and pretend that “compulsory” is neutral.

                      And you don’t seem to have made a single comment about the merits and drawbacks of the proposal.

                  • McFlock

                    It’s only “awkward” if you’re unused to typical definitions of words as used in the English language.

                    Frankly, either term is valid for something that is applied to everybody and mandatory.
                    I believe that in some cases GST can be claimed back, so it’s not universal. Although for those who aren’t exempted, it is compulsory.

                    If there are exceptions, a thing is not universal. Access might be universal, but that thing is not.

                    Bottom line, the logic behind the proposal seems to be that the public goods (and even the private benefit) of universal/compulsory membership outweighs the private good of being entitled to piss all one’s money away.

                    But bending over backwards in a semantic argument seems to be more interesting to you than actually debating the balance of public vs private goods and bads of the proposal.

                    • So we don’t have universal superannuation then?

                    • McFlock

                      Oh, you can’t read long sentences?
                      I will summarise.

                      Short answer: yes with an “if”.
                      Long answer: no with a “but”.

                      Either equally valid.
                      Both irrelevant to the post.

                    • @Colonial Viper above.

                      Well I personally wouldn’t feel qualified to make a definitive pronoucement on the matter myself, and would draw your attention to the stated assumption behind my comment.

                    • No need to get snippy. I’m trying to argue in good faith.

                      I just think the word “universal” gets at the heart of what’s being proposed. It’s a word that usually connotates benefits, not contributions.

                      “Compulsory” is a good word – it’s unambiguous, forthright and accurate. That being said, I can see why Labour wants to avoid using it and that’s a politicians prerogative. Cutting through euphemisims is ours.

                    • Te Reo Putake

                      On the upside, after all these hours, Liam has at least learned that universal in this context isn’t a weasel word. It’s a start, I suppose. Perhaps now we can move on to whether Labour’s proposal is a Good Thing?

                    • McFlock

                      I just think the word “universal” gets at the heart of what’s being proposed. It’s a word that usually connotates benefits, not contributions.

                      “Compulsory” is a good word – it’s unambiguous, forthright and accurate.

                      so you judge one (often negatively-viewed) word on its accuracy, and the other (fairly neutral) on its alleged connotations.

                      And you’re trying to argue in good faith?
                      Get real.

                      [edit:] @TRP – lol

                    • Sorry to disappoint – I have learned nothing.

                    • McFlock

                      that was your choice from the start.

        • Te Reo Putake 9.1.1.2

          I was talking about the concept of universal super, not the mechanics of our version.

          Pop quiz, Standardistas! Can you name the other countries who have universal super?

          • Tracey 9.1.1.2.1

            australia? Uk?

            • Te Reo Putake 9.1.1.2.1.1

              Canada, Denmark and Russia. At least they are the ones, that like us, don’t have means testing. Funnily enough, it’s one of the reasons the eastern bits of the Ukraine have bolted into Putin’s tender embrace.

              • Colonial Viper

                That and the Ukraine is going to be a very cold, dark place this Winter.

                • Te Reo Putake

                  Yep. Though lots of Europe’s Russian gas still goes through the Ukraine so there might be a bit of unofficial taxation in kind on the way through. A tap here, a tap there, that sort of thing.

                  http://www.theguardian.com/world/2014/jun/16/russia-cuts-off-gas-supply-ukraine

                  • Colonial Viper

                    Given that Ukraine uses 50 billion cubic metres of gas a year, the EU might notice that it’s getting short changed on its supplies from Russia.

                    Ukraine does have quite a few bcm of natural gas stored in reserve (Russian gas which hasn’t been paid for, actually) but its not enough to last this winter out.

          • alwyn 9.1.1.2.2

            The United States qualifies, by your definition.

            • Te Reo Putake 9.1.1.2.2.1

              Don’t think so, Alwyn. Pretty sure there’s only four countries with guaranteed, non means tested superannuation. I thought the USA had a variety of state and employment based schemes, but no over-arching payment that everyone got at a nominal ‘retirement’ age. But you may have some relevant info to hand. Unlike some, I’m always happy to learn interesting new facts!

              • alwyn

                I was thinking of the Social Security system. I hadn’t checked it but I was thinking of the fact that literally everybody has a Social Security Number. You can’t really exist in The States without it. Even illegal immigrants have them and deductions are made by their employers.
                I’ve had a further look and according to Wikipedia

                “Some Federal, state, local and education government employees pay no Social Security but have their own retirement, disability systems”

                Thus you will be right and it isn’t (quite) universal. Close but no cigar. Next time I’ll go to the trouble of checking before posting.

  10. Labour’s fiscal fiddling on wages and savings is pathetic.
    It’s so-called ‘brains trust’ is a hotbed of the ABC capital cringers.
    Workers welfare comes second to parliamentary careers and bankers’ profits.
    Capitalism is doomed and if we don’t act so are we (humans).
    While coat-tails exist my party vote will go to IMP.
    Why? Because Labour is stuck on 20% of the vote and I don’t see that changing much so unless we get some overhang from the left of Labour and the Greens they are not going to beat the NACTs.
    That is the only hope for a Labour-left government that has some new blood and new ideas to stir up the shit of its craven Blairite grand coalition dogma.

    • Te Reo Putake 10.1

      Do you flat with Phil Ure, Dave? I think some of the smoke maybe drifting under your bedroom door.

      From the top:

      Labour is looking to enrich workers. What’s your problem with that?

      The ABCers have bugger all influence in caucus these days and a good number have recently announced their retirements or are stepping aside to be list only.

      You don’t like coat-tailing so you’re going to vote for a party that depends on it. Weird.

      Labour is stuck on 20% of the vote. Um, no, you’re channeling one of BM’s wet dreams.

      Blairite grand coalition dogma? I think I saw them at SxSW or was it Camp Lowhum? Are you their triangle player? Groovy, man.

      • bad12 10.1.1

        Te Reo, and just like Alices wonderlands all the ABC faction stepped through the looking glass and disappeared, poof, gone,

        Excuse me if i have ”harshed your buzz”,(got any more like that, absolutely hilarious),

        Face it, the only left policy announced so far by David Cunliffe has been that beneficiaries will be included in ”Best start”, the rest of it, Business As Usual…

        • Te Reo Putake 10.1.1.1

          Shit, the list of things you know fuck all about also includes the works of Lewis Carroll. Talk about losing the plot …

          • bad12 10.1.1.1.1

            There there Te Reo, the buzz must have got overly harshed this morning,(excuse me while i chortle up my sleeve at your little ham fisted attempt at street cred),

            Hows defending David Parker going, must be a little hard defending one who took his learning off of Sir(spit)Roger Douglas,

            Another wonderful piece of ”winners and losers” from David don’t you think…

  11. fisiani 11

    First compulsory pension theft now compulsory wage theft. The ABC caucus are doing a damn fine job of getting rid of The Cunliffe in late September.

    • One Anonymous Bloke 11.1

      Comical Fisiani that isn’t up to your usual standards: if it isn’t funny it just looks like foolish dribble.

  12. James Thrace 12

    I am not in favour of any form of compulsion to invest in KiwiRorter until the following are implemented:

    1) The level of principal paid in is guaranteed in the event of GFC Mk II
    2) Banks will be forbidden to use KiwiRorter balances as part of their “balance sheets” to comply with Captial Adequacy Ratios as set out by the RBNZ
    3) Fees are to be set by Central Government at a nominal sum of CPI each year. So if CPI in 2015 is 1.5%, the total fee payable is 1.5%. If CPI in 2020 is 2.2%, the total fee payable is 2.2% etc

    The current set up is just a gravy train for Goldman Sachs – the bank that owns the world.

    • Colonial Viper 12.1

      The current set up is just a gravy train for Goldman Sachs – the bank that owns the world.

      This is also my perspective and I want to know why it’s been set up in this way as if GFC I never happened.

      Your suggested steps are logical IMO.

    • Tracey 12.2

      Milford charges a fee and then a further fee based on performance above tge benchmark. I have no problem with that. I have watched too many funds rort people through lack of performance incentive, just take the fee and fuck the fund.

      • nadis 12.2.1

        Problem with most performance fees is they are badly structured. The concept is sound – alignment of interest, but most managers have fees that align interest on the upside, but not on the downside. Milford has one of the worst examples of a performance fee I have ever seen. Check out their Global Fund – invests 100% in global equities. The performance fee is calculated as 10% of the return above OCR+5%. So in a year when equities do 20% – Milford captures 10% of the performance above 8%. So if Milford did nothing but passively invest in equities they would have pocketed 1.2% of thee fund in performance fees FOR DOING NOTHING! A manager should only earn a fee for doing better than the market.

        This is so egregious I withdrew my money from their kiwisaver when I saw this fee structure.

    • Lanthanide 12.3

      My kiwisaver fees are currently less than 1.5%. Why exactly should I be paying more?

    • nadis 12.4

      James

      pretty much all of your three points in place right now:

      1. Invest in the conservative option – very low likelihood of losing capital especially once you take into account government subsidies. But this comes with a much bigger risk – not growing our capital. Anyone with 10 or 15+ years should be in an aggressive fund, just buy a low cost, passive style fund, invest regularly and don’t ever panic.
      2. Kiwisaver funds can not be part of bank balance sheets. Funds are unit trusts and held by an independent trustee on behalf of investors. Regulated by the govt actuary and the FMA. Nil chance of assets being taken or used by banks as part of their reg capital. Their is nil chance of gross mismanagement or inappropriate use of funds. The FMA has already unofficially strongarmed at least two kiwisaver providers out of the business.
      3. Fees are quite low already and generally below your CPI example. Average fee for a growth fund is 1.75% but you can find options as low as 0.50%. Conservative funds average 1.29% and again as low as 0.50% if you search around.

      KS isn’t perfect but a lot of the obvious bad practices have been taken out of the equation. Goldman sachs makes very little out of kiwisaver – they don’t manage any kiwisaver money and have a very limited presence in NZ. To see who’s making the money look at the market share stats – ANZ, ASB, AMP, Westpac, TSB/Fisher – they make up more than 85% of the market.

  13. Lefty 13

    Somebody needs to explain the role pension funds play in increasing inequality to the Labour leadership.

    Actually while they are about it maybe they could give them a rough rundown on how capitalism works.

    Maybe then they would be able to come up with some policy that wasn’t just for the benefit of the rich.

  14. The Chairman 14

    “Growth in the minimum wage to maximise cover” gives away the “yet to be set income level”

    Contribution rates will increase gradually by 0.25% to 4.5% in 2021, yet variable Kiwisaver contributions (meaning people pay more) will be used as a tool to control inflation?

    Is this on top of the 4.5%? And up to what level above 4.5% ?

    • Lanthanide 14.1

      @ Chairman, the mere act of making Kiwisaver compulsory, and also increasing the rate by .25% per year, will act as a damper on inflation.

      After that, I suspect the adjustments would probably be for employees to pay more and employers less, so not going over the 9% rate but pinching money directly out of employee’s paychecks.

      • The Chairman 14.1.1

        What of the dangers of flooding the markets with liquidity?

        Too much liquidity chasing a limited number of investment opportunities is prone to inflating bubbles

        • Lanthanide 14.1.1.1

          Good thing kiwisaver funds aren’t required to invest only in New Zealand, eh?

          • The Chairman 14.1.1.1.1

            Not in a down cycle when there isn’t any new investment demand, yet we require the funding back to simulate our economy.

            • Colonial Viper 14.1.1.1.1.1

              You can’t stimulate the economy by taking away the spending power of bottom and mid level consumers.

  15. bad12 15

    Bravo Labour, i say again Bravo, there’s a pattern emerging here, my reading of the skeleton of this pattern says that a kid at school today will not be getting a pension from the State,

    Give it another 5, years that is, and the next in the long line of Neo-libs that have hold of the Labour Finance portfolio will be giving us another ”there is no alternative” with the call for the raise of entitlement for super to 70 and on it will go,

    Which ”workers” do Labour represent, the cleaners and the other low paid struggler’s in the economy, doubt it,

    Labour cannot see past it’s own heavily middle class nose when it comes to formulating policy…

    • Lanthanide 15.1

      “that a kid at school today will not be getting a pension from the State,”

      Probably. I don’t expect to get any sort of pension till I’m 70, and that’s if I’m lucky.

  16. john 16

    The justification for the policy at top, paints a one sided picture. Just a few points to add some balance-

    • Kiwis have over $100 billion invested offshore. So dividends and interest are not the one way street they’re made out to be.
    • Foreign investment in NZ is not all bad. 25% of our jobs would not exist without foreign investment.
    • Foreign investment in publicly listed NZ companies has gone from 60% 15 years ago, down to just 30% today.

    I think a lot of Labour’s Policies are not well thought out, for example the asset sales sabotage plan called Kiwi Power. It’s really badly thought out late one night in a hurry and totally undermines the whole premise of the anti asset sales argument, that the assets should be kept because they provide such a good income for the government.

    Even more poorly thought out was slowing house prices by clamping down on immigration, when such a large number of Labour voters are immigrants i.e. Pacific Islanders and around 50% of the Auckland population. That was a real own goal that will haunt and haunt.

    However the Kiwisaver policy, and using Kiwisaver as the economies pressure valve instead of interest rates, is one of the policies well worthy of further investigation.

    • One Anonymous Bloke 16.1

      The Kiwi Power plan will not just sabotage National’s Quisling theft, it will also deliver lower power prices the way similar policies do all over the world.

      Remember that the left parties have said they’ll return our property to its rightful owners on terms that suit us? I would be delighted if that were accompanied by the sounds of wingnuts choking, so it’s nice of you to oblige.

      Thanks.

      • john 16.1.1

        The claim is that it will save $750m and allow the power companies to still make a reasonable profit is nonsense

        How can $750m be saved, when that is MORE than the total profit from ALL the power companies, which was $376m in 09, $606m in 2010, $592m in 2011 and $488m in 2012.

        So they will ADD a middle layer of bureaucracy, leave the power companies with a profit, and save more than they currently earn. They need to do some primary school maths.

        It’s no wonder more than one expert in the sector have said it will cost consumers MORE than they would otherwise pay.

        • One Anonymous Bloke 16.1.1.1

          The people with the vested interests are your top advisers?

          Look, I know your partisan bias renders you more-or-less blind to a reality check, but as I said, I’m trying to nurture better wingnuts. Clearly, if the lines you are parroting were true, countries that introduced similar policies must all have experienced a consequent jump in power prices.

          All you have to do is provide citations and you’ve made your case :lol:

          • john 16.1.1.1.1

            So how do you explain saving $750m when the companies don’t even make that much?

            • One Anonymous Bloke 16.1.1.1.1.1

              It always comes with a trace of pathos when you have to explain basic business concepts to people who cite business values at the drop of a hat.

              Question: what is the difference between turnover and profit?

              • One Anonymous Bloke

                Cat got your tongue?

                Next question: as a saving to consumers, does the $750M come out of turnover or profit? Think carefully now.

                • Colonial Viper

                  But what are we going to do with all those $200K pa salaries in the power companies!!!

                  • One Anonymous Bloke

                    There’s no need for public utility salaries to go that high. The problem is the SOE model :twisted:

                • john

                  If you cut prices by $750m it obviously comes off turnover and profit.

                  Just because your turnover goes down, that doesn’t reduce any of your expenses. None. Generating costs, interest, depreciation, are all exactly the same.

                  That’s why not a single person anywhere in the Green Party or Labour Party
                  has been able to give even the slightest explanation of where the $750m will come from.

                  They don’t have the foggiest idea.

                  That’s a total failure.

                  Which is no surprise for a policy that was nothing more than an ill thought out sabotage plan desperately hatched late at night just before the asset sales.

                  Like the immigration own goal, it doesn’t pay to make policy on the hoof.

                  • Colonial Viper

                    Oh John, youre starting to sound shrill now. Why so desperate? NZers know that they’ve been taken for a ride by the power companies, Labour is simply pointing out by how much.

                    • john

                      It’s laughable.

                      Not a single person in Labour or Greens has yet been able to explain where the $750m will come from when it’s more than the companies have been making.

                      Neither can they explain why SOE prices went up much faster under Labour, and by significantly less under National.

                      That’s what happens when you make up policy on the hoof late one night around a kitchen table.

                    • One Anonymous Bloke

                      What happens when you’re an authoritarian follower of limited intelligence with no valid argument?

                      Calling the Bellman, come in please your time is up.

                  • One Anonymous Bloke

                    No John, it doesn’t. That would be why they researched existing successful policy from the real world instead.

                    If you’re going to tell lies you’re going to make yourself look more like mendacious trash than the innocent victim of a right wing brain (see how charitable I’m being – I’m still giving you the benefit of the doubt).

                    Are you sure you really want to go there?

                    • Lanthanide

                      Lol, afflicted by a right wing brain, love it.

                    • One Anonymous Bloke

                      If only we were right-wingers: we could propose eugenics as a solution!

                    • Lanthanide

                      Re-education camp?

                    • One Anonymous Bloke

                      Nah, we’re stuck with promoting evidence-based policy and cleaning up after the shitty puppies. On the other hand I’m sure I could find work for them at the Ministry of Truthiness.

                  • One Anonymous Bloke

                    This presents an opportunity to debunk John’s lies about immigration policy too.

                    The NZLP makes policy more-or-less in public; all policy, including immigration policy, is subject to its constitutional arrangements.

                    When right wing trash make hay out of this (in the absence of public policy making in their own camp), the Johns of this world can always be relied on to swallow it hook, line, and shrinkum.

                    What kind of fuckwit government doesn’t manage immigration? Oh, that’s right: the one we’ve got.

                    • john

                      What kind of political Party craps on their own supporters?

                      Oh that’s right. One on 30%

                    • One Anonymous Bloke

                      Beaten, humiliated, the cur lashes out in one final, desperate, feeble spasm, only to be told: I’m a Green voter, chump.

    • Lanthanide 16.2

      “It’s really badly thought out late one night in a hurry ”

      Actually during the power reforms in the 90’s, the consumer’s institute recommended a single-buyer model, as is successfully used elsewhere in the world.

      20 years after Max Bradford’s reforms have shown to only increase prices for the public, I think it’s time this venerable idea was debated and considered for implementation.

      But let’s not let history get in the way of rhetoric, shall we?

      • john 16.2.1

        If power prices had stayed low, we would still have the broken transmission lines that meant regular blackouts for Auckland.

        We would still have a Cook Strait Cable that was years past it’s use by date, with risk of major blackouts across the whole North Island.

        And we wouldn’t have nearly enough power for demand.

        The majority of increases over recent years have been transmission and lines charges.

        • Colonial Viper 16.2.1.1

          Still many millions of dollars in fat to be cut out off profit margins and senior executive pay.

        • Lanthanide 16.2.1.2

          It is quite possible to invest in infrastructure without having excessive costs imposed on top.

          Do you think Meridian’s ads with Newsboy on TV somehow help power the country? What about Mercury Energy’s ads about how they have “good energy”? Or those ads with the pukekos? Do you think power prices could be lower if gentailers weren’t competing with each other in an artificial marketplace?

          Or how about how National forced Meridian to sell one of their dams on the Waitaki River to Genesis Energy and then subsequently took a special dividend of $520M from Meridian to pad their budget out after they’d recklessly given tax cuts to the top 20%? Did you know that now all of the power companies have been privitised, that Genesis is talking about selling the dam back to Meridian, because it is more efficient if Meridian manages it, which is exactly what all of the experts said at the time that National cooked up their ridiculous scheme?

          Maybe if you dig under the surface, you’ll discover that our electricity “market” is really a racket and that it isn’t serving the interests of NZ citizens.

          • One Anonymous Bloke 16.2.1.2.1

            Too many facts for John I’m afraid.

          • john 16.2.1.2.2

            That’s funny.

            We spend billions upon billions of dollars each year generating and distributing electricity, but the prices have apparently escalated massively, all because of the newsboy ads.

            And it’s funny that for companies who are supposedly rorting the system, they have such very slim profit margins.

            And that although generating power is supposedly incredibly profitable, that no other companies want a slice of the pie.

            • Colonial Viper 16.2.1.2.2.1

              And that although generating power is supposedly incredibly profitable, that no other companies want a slice of the pie.

              You really are a fucking moron. Of course they “want a slice” of the generation pie. That’s why they bought up all the billions of dollars worth of shares the Government sold off.

              Man, please pay attention. Slacker.

            • Lanthanide 16.2.1.2.2.2

              “We spend billions upon billions of dollars each year generating and distributing electricity, but the prices have apparently escalated massively, all because of the newsboy ads.”

              I was using TV advertising as an obvious example of what happens when you set up a faux market with gentailers that compete against each other for the same customer base. Take out the television ads. Take out all of the special promotions. Take out all of the duplication of account management, customer service management etc, and you can likely cut administrative overhead costs by 5-10%, if not more.

              “And it’s funny that for companies who are supposedly rorting the system, they have such very slim profit margins.”

              They could increase their profit margins if they stopped paying such massive salaries to their CEOs and directors, which incidentally rose massively as a result of the privatisation. Of course the shareholders are going to want increasing profits, not flat profits, so this in turn will directly result in higher power prices.

              “And that although generating power is supposedly incredibly profitable, that no other companies want a slice of the pie.”

              Because it takes a lot of capital to get into the generation game. The existing generators exist because they inherited their assets from the state that had built them up over decades.

  17. gsays 17

    good standard of debate and discussion, however…

    when i heard this policy announcement my first thought was that they have just handed the election to the right.

    what to me, became clear last two elections, is that voters are very selfish and shortsighted.

    2008 they voted for taxcuts, 2011 they voted for selling of state assets and against capital gains tax.

    i do think the policy has merit (tempered by bills’ comments @ 5 and james thrace @12) but to the great unwashed will just seem like less for me.

  18. cricklewood 18

    My one abiding concern is that some twit at the reserve bank or parliament will in 20 so years as large amounts of Kiwisaver come due will decide that it will be “inflationary” and then seek restrict access by either changing the age of entitlement or limit the amount that can be removed per year etc.

    • Lanthanide 18.1

      Politicians that diddle people out of retirement money tend to have short careers.

      • Colonial Viper 18.1.1

        No problem, they leave and join the board of a big bank or some such

      • cricklewood 18.1.2

        Two things, it only takes one term to do something like that and then following govts never change it.
        Its also why raising the super age is a fairly silly policy for Labour to have…

    • The Chairman 18.2

      There is talk of forcing Kiwisaver investors to use part or all of their savings to buy life annuity.

      http://bit.ly/1ivhwYf

      http://bit.ly/1m5hepc

      • nadis 18.2.1

        Talk is only by those self interested. Which I guess could be a concern. Annuities are a product entirely without merit – I really cant see them being imposed in NZ. Globally other countries are getting rid of them. Especially now with interest rates at all time lows they make even less sense. Put the money in several banks of your choice.

      • Unfortunately I can easily see it happening. Once you’re making policy based on the idea that people must be forced to save their money “wisely”, it’s logical to make more policy to force them to spend it wisely.

  19. Dom 19

    This policy is very confusing to me

    -What is the income level where compulsory contributions kick in?

    -Is the Variable Savings Rate tool going to be used by the Reserve Bank ON TOP of the eventually raised contribution rate of 4.5%?

    -If I’m just inside the income range for compulsory contributions it’ll be a hell of a hit in the pocket. Bloody hell there’s enough deductions coming out of my wage packet already!

    Is it just me that’s confused over this?

    • Lanthanide 19.1
      1. The level has not yet been announced, but other wording they’ve given implied that it will be set somewhere above the minimum wage; ie those earning the MW won’t be forced to join Kiwisaver, but as the minimum wage is raised (Labour’s goal is to get to $17/hour eventually), they will likely enter the compulsory bracket.
      2. This is unclear and it hasn’t been stated by Labour how it will work. It’s possible they may take the contribution rate over 9%, or they may balance it so that instead of an even 4.5% / 4.5% split between employee and employer, it could stay at the total 9% but be weighted to 5% employee / 4% employer, to take money directly out of people’s paychecks.
      3. Yes, that does seem to be the result of the policy. Trying to apply some sort of abatement rate to this to phase it in over an income band seems infeasible.
  20. infused 20

    All I heard was bad press about this today.

    Policy doesn’t bother me either way, but I think Labour slipped up here.

    • One Anonymous Bloke 20.1

      Yes, we will profit from accepting the word of a right wing shill at face value, comrades :D

    • Colonial Viper 20.2

      OK as much as it pains me, infused has a good point here.

      WHOM EXACTLY exactly are the voters that Labour is hoping to sway into its court with this compulsory KiwiSaver policy. Which is the CONSTITUENCY that Labour is attempting to impress with this.

      Because the only people I can see who will like this policy, are the financial sector and big banks.

      Small employers will hate it, people on low incomes will hate it, beneficiaries and unemployed – they won’t give a stuff about it.

      So…WHOM is this policy designed to appeal to. Anyone hazard some suggestions?

      • One Anonymous Bloke 20.2.1

        Populism is your benchmark? Treading on Winston Cray-Cray toes much?

        • Colonial Viper 20.2.1.1

          Why would a political party be interested in populism? Is there a General Election happening soon?

          So what is the answer to the question – what constituency is Labour targetting with this policy announcement?

          • One Anonymous Bloke 20.2.1.1.1

            The constituency of people who support compulsory retirement savings, according to opinion polls, is quite large. Whether they’re traditional Labour voters is debatable…

      • Lanthanide 20.2.2

        All those who greeted their variable-rate KS plan with interest, which included the reserve bank and many in industry, IIRC including federated farmers.

        The first part to making the variable-rate policy possible is universal membership.

        • Colonial Viper 20.2.2.1

          OK, so with this policy are there even 10,000 votes to be won amongst all of that crowd?

          • RedBaronCV 20.2.2.1.1

            More likely lost 10,000 I think. All I hear are voters departing.

            The minute such a scheme is compulsory the drift off of universal super will start and future right wing governments will give that a decent shove anytime they can.

            Putting the burden for controlling inflation onto wage & salary earners only. Why shouldn’t the self employed be required to join too?

            No provision for those who do unpaid work at times during their adult life -there go the women departing with their votes. Any drift in universal super will hurt them badly. Likewise the low paid.

            Wages and salary earners will have a good chunk of their savings out in the open (not hidden in trusts and companies) at the mercy of future government policies.

            • Colonial Viper 20.2.2.1.1.1

              Indeed, I don’t see any disadvantaging of the financial sector, of financial capital or the owners of financial capital with this scheme.

              In fact, they are about to get a whole lot richer off the back of compulsory KiwiSaver.

  21. fisiani 21

    Parker is surely not stupid. He knows this policy will hurt the poor and first home buyers suffering under the huge mortgage rates that inevitably follow a Labour govt. Who can stomach being forced to forego 9% of their wages? Cui Bono? Parker of Robertson will be the next leader. Listen to Matthew Hooten analysis on Radio NZ today. I’ve posted on this a few days ago. Hardly anyone on the Labour List will make it into parliament. Andrew Little and Jacinda Ardern will be gone. Kelvin Davis will be gone unless he is in the top 10. The Labour secret man ban adds to the problem. I cannot accept that the continual roll out of unacceptable policies is not deliberate.

    • RedBaronCV 21.1

      And without even trying Nact has a woman ban – they don’t even seem to have women standing for seat selection just blokes

      • fisiani 21.1.1

        King Country and West Coast and Invercargill would disagree to name just a few.

  22. mickysavage 22

    Man tough crowd!

    Short term poor workers will not get a benefit and young people with a mortgage should concentrate on paying this off. But medium to long term increased savings will mean more local control of local industry and companies. Aussie has boomed with a similar arrangement.

    • john 22.1

      The question is, will Labour’s proposed Capital Gains Tax on shares mean that everyone’s Kiwi Saver Account will now be taxed for capital gains?

      • fisiani 22.1.1

        John you are absolutely correct. Labour equals tax and more tax and even tax on tax.Tax on baches boats, businesses, buses,and bingo wins. Screwed 9% of your wage and the CGT slapped on it. I tell you It’s a vote winner. So too is being forced to work another 1000 days.

      • Lanthanide 22.1.2

        Everyone already pays tax on their Kiwisaver gains. Most (all?) KS are set up so they qualify under the PIE tax scheme, which has slightly different tax rates than standard income tax, with the maximum tax rate being 28% instead of 33%.

    • Colonial Viper 22.2

      But medium to long term increased savings will mean more local control of local industry and companies (1). Aussie has boomed with a similar arrangement (2).

      Hi MS,

      1) Why (and how) will it mean “more local control of local industry and companies”? Can Labour point to evidence that the current $18B in KiwiSaver funds has in any way led to “more local control of local industry and companies.”? If those KiwiSaver funds tripled to $60B what actual difference would that make in “more local control of local industry and companies”?

      2) Aussie’s arrangements were suitable in the era of the 1970’s to now. But we are now in an age of energy and resource depletion and substantially increased financial instability. Is there any evidence that Labour has taken these factors into account in the set up of this scheme?

      • One Anonymous Bloke 22.2.1

        Surely there’s evidence that the NZLP has considered these factors. You’re a member of the NZLP and therefore you would have raised them during the policy development process, right?

        • Colonial Viper 22.2.1.1

          Caucus somehow forgot to call with me before releasing this policy

          It’s fairly simple questions – we already have $18B in KiwiSaver funds. How has that helped to retain ownership and control of local companies? How will a bigger sum do so in the future? It didn’t stop our power generators being sold off.

          And has this scheme taken into account the permanent end of economic growth due to resource and energy depletion, or are we just trying to feed the “infinite growth on a finite planet” ponzi scheme further.

          Also why not just fix the damn problem. If the aim is to retain control and ownership of local companies, why not just make it happen now instead of waiting another decade for some market acceptable financial strategy to possibly take hold.

          • One Anonymous Bloke 22.2.1.1.1

            Populism?

            • Colonial Viper 22.2.1.1.1.1

              Do you have anything relevant to say about the aspects of the policy that I raised?

              • One Anonymous Bloke

                Well, I made the point that a reason to not “fix” the problem “right now” is populism: I think it would be a relatively hard sell as policy goes, however necessary.

                I suppose more money in Kiwisaver equals more local investment. Are you saying that there has been no discussion of these matters within the party before the policy announcement?

                Labour’s article on the policy platform states that it:

                is not our election manifesto. That will still be created through the democratic processes and structures of the Party, and will contain the specific initiatives that an incoming Labour Government will undertake. The manifesto is required by the Constitution to be consistent with the Platform.

                What gives?

                • Colonial Viper

                  What gives is a fucking disconnect mate, that’s what gives.

                  I suppose more money in Kiwisaver equals more local investment.

                  Only if you force the funds to be invested onshore instead of on Wall St or other places offshore.

          • Lanthanide 22.2.1.1.2

            “It’s fairly simple questions – we already have $18B in KiwiSaver funds. How has that helped to retain ownership and control of local companies? How will a bigger sum do so in the future? It didn’t stop our power generators being sold off.”

            You’re conflating issues here.

            The power generators were sold off because National wanted to sell them off. Whether KS existed or not, National would still have made that decision.

            That fact that KS does exist, and that many KS providers (apparently) did buy shares in the SOE’s, does indeed confirm that we have retained ownership of these companies (through KS) that otherwise would have gone offshore (because ‘mum and dad’ didn’t have the cash to invest in the firesale themselves).

            • Colonial Viper 22.2.1.1.2.1

              OK so KiwiSaver funds bought a few % of the going shares. I suppose that’s better than having those few % go offshore. I’m not convinced though that any of that translates into any kind of effective or practical “more local control” of Kiwi industries and companies.

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