Getting it right matters

Written By: - Date published: 9:49 pm, October 11th, 2008 - 11 comments
Categories: election 2008, kiwisaver, Media, national - Tags:

I don’t want this post to be taken as overly critical; it’s just meant to offer some constructive advice. John Armstrong’s piece in the Herald today is good. It’s great to see a senior political commentator acknowledging that politics is a competition of ideologies, rather than merely a game or competition of personalities, but it’s terrifying to see such a lack of either policy knowledge or maths skills from a person in such an important position.

Armstrong writes:

“National’s commitment [to Kiwisaver] has to be questioned.. More so after it was rumbled by the Council of Trade Unions, which found in the fine print that Government contributions would be reduced for those earning between $26,000 and $52,000 and who have been paying 4 per cent of their salary into the scheme.”

That’s wrong on two points:

1) Every Kiwisaver with an income below $52K would lose government contributions, not only those between $26K and $52K.

2) The CTU did not read any fine print. There is no fine print. In fact, National makes no mention of the fact that under National many Kiwisavers would get less money from government contributions than they currently do. But it is obvious to someone who knows the policy and The Standard posted on it two hours after the tax package came out.

Here’s how it works: the Government matches your contributions of 4% of your income Kiwisaver up to $20 a week. That means that a Kiwisaver with an income of $26K ($500 a week) is contributing $20 a week. They and everyone on a higher income (= contributing more) gets the full $20 a week. Everyone below gets 4% of their weekly income (eg. someone with an annual income of $13K, $250 a week, gets $10 a week). National would only match 2% contirubtions. That person on $26K would only be contributing $10 a week and lose $10 a week in matching government contributions. The person on $13K would contribute $5 a week and lose $5. And people on incomes up to $52K would lose out. In the current system, they are getting $20 a week; at 2% they’re contributing less than $20 a week and so lose government contributions. Any Kiwisaver with an income below $52K would lose thousands in over the years (not including the employer contributions they would also lose).

I would have thought professional political commentators would knows how Kiwisaver works and would have picked up on the implications of going from 4% to 2% for government contributions immediately. So, it’s worrying that it’s still news to Armstrong, and presumably other professional political commentators, days after the policy came out. Many government policies have these wrinkles which entail maths at a slightly complicated than every day level and have serious ramifications for Kiwis. Media outlets need to ensure their commentators, or at least their researchers, are able to understand them so that Kiwis get the information they need.

11 comments on “Getting it right matters ”

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  1. rave 1
    11 October 2008 at 10:10 pm

    Nor did I notice Armstrong pick up on the fact that the employer will effectively pass the cost of the employer contribution of 2% onto the worker as a ‘wage increase’, making the worker cough up 4% for a 2% government contribution. And of course miss the irony of Key’s argument that a 2% contribution would encourage those on low incomes to sign up!?!?

  2. the sprout 2
    11 October 2008 at 10:35 pm

    it seems to me that National are still benefiting from a lot of voluntary blindness amongst people who still desperately want to believe their team and ideas aren’t as lame as National’s leadership keeps insisting on proving time, and time again.

    i doubt it was a conscious oversight, i think Armstrong just didn’t want to believe they’re as hamfisted as they are.

  3. Paul Robeson 3
    11 October 2008 at 11:18 pm

    Hah!

    No one from the Standard ran it- it took the Herald editorial!

    http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10536924

    Drs Bollard and Brash and good old Granny unite to tell John Key he has more in common with Sarah Palin than Obama.

    To tell the truth- he has done nothing but attempt to undermine confidence in any number of New Zealand institutions in his cynical attempt to regain the Treasury benches. This week it was the Reserve Bank, and our money supply.

    They admitted today that they hadn’t even properly thought through their cuts to Kiwisaver. This is all they have supposedly been working on for the last 3 years! How can this incompetent, shifty, ill disciplined lot be considered fit to govern?

  4. Felix 4
    11 October 2008 at 11:23 pm

    “They admitted today that they hadn’t even properly thought through their cuts to Kiwisaver.”

    Do you have a link for that too please Paul?

  6. Felix 6
    12 October 2008 at 12:20 am

    Thanks Steve,

    It’s all becoming quite farcical isn’t it?

    It’s like they really thought they wouldn’t have to explain anything. How long do they think they can answer every question with “we’re looking into that”?

  7. Con 7
    12 October 2008 at 3:59 am

    It’s like they really thought they wouldn’t have to explain anything. How long do they think they can answer every question with “we’re looking into that’?

    Ah … we’ll get back to you on that.

  8. Robin Grieve 8
    12 October 2008 at 9:06 am

    Labour’s current Kiwisaver scheme is a great opportunity to take money off the poor and give it to the rich. It is such a generous scheme, for every $1000 a person puts in the government puts in $2000. (employers put in nothing under Labour but will have to under National). 800,000 are in and they are getting paid this generous amount from the taxes of the poor who cannot afford the 4%. Under National they only have to put in 2% so it should become under National a far fairer scheme for the low paid than it is now. All low paid workers should vote National. (watch out that last statement might put your blog in breach of the Labour Green NZ First anti free speech laws like the radio station ZB which is now being investigated by the police for urging people to vote Labour)

  9. ghostwhowalks 9
    12 October 2008 at 9:29 am

    Robin are you blind…” (employers put in nothing under Labour but will have to under National”

    Currently Employers have to pay a minimum of 2% rising to 4%, and they cant take that share out of your wages, which is what national will alow

  10. randal 10
    12 October 2008 at 9:32 am

    looks like the whole country is under investigation just for being alive. If the nats hadnt tried to buy the last election the police would not be involved in the very process of democracy but now they seem to have becom the arbiter. what the hell is going on!

  11. Robin Grieve 11
    12 October 2008 at 3:53 pm

    ghostwhowalks lets see who is blind, the employers 2% is fully refunded by the govt. (or really the poor taxpayers on $12 per hour who can’t afford labours scheme)
    DUH

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