Taking from Kiwisavers & giving to the rich

Written By: - Date published: 6:32 am, May 10th, 2011 - 81 comments
Categories: budget 2011, class war, kiwisaver, tax - Tags:

John Key has confirmed he intends to slash Kiwisaver to the bone by cutting the up to $1040 a year government contribution you get as a member. Of course, this is the savings budget according to National’s spin. They’re going to ‘encourage’ savings by taking that money from Kiwisaver and giving it to rich individual savers. It’s just more class war.

Word on the street is that National will use the money they pull out of Kiwisaver to make interest on deposits in banks and finance companies tax-free, at least up to the rate of inflation. It’s not clear whether they will cut the government Kiwisaver entirely or exactly how the tax-free interest will work but the details only change things by a matter of scale.

Let’s consider two scenarios:

Mary is a typical worker. She is on the median full-time wage of $40,000. Thanks to National’s previous cuts to Kiwisaver, she isn’t entitled to the full $1040 a year tax credit because 2% of her income is just $800 per year. With a kid to raise, rent to pay, and the cost of everything going up, her after-tax and after Kiwisaver weekly income of $625 doesn’t go far but she manages to put away $50 a week on top of her Kiwisaver – $2,500 a year.

With inflation at 4.5%, she gets $112.50 a year in interest tax-free. At her marginal income rate of 10.5%, her total tax saving per year is $12.

Mary loses $800 a year in Kiwisaver and gains $12 a year in tax-free interest. Net result: -$788 a year

Now consider John. He is in a high powered role that pay $405,000 a year. Let’s say he is also in Kiwisaver. The loss of those tax credits sets him back $1040. Fortunately, he doesn’t have much in the way of living costs: his employers supply the house (newly repainted), the chauffeur-driven car, there’s always some dinner he can go to, free holidays, and if he’s running late to something he can even call in a helicopter all paid for by the employers! So, his net weekly income of $5080 goes a long way. He manages to save half of it (got to have some treats) – $2500 a week or $130,000 a year.

With inflation at 4.5%, he gets $5850 a year in interest tax-free. At his marginal income rate of 33%, his total tax saving per year is $1930.

John loses $1040 a year in Kiwisaver and gains $1930 a year in tax-free interest. Net result +$890 a year

With each subsequent year’s lost Kiwisaver contributions and interest-free tax, the disparate wealth impacts of these changes on Mary and John grow further and further apart.

It’s almost as if the government has reached into Mary’s pocket, taken out hundreds of dollars a year and given it to a man on ten times her income who doesn’t need it.

A policy that takes $1040 a year out of $1.6 million Kiwis’ savings and gives it out in such a way that you have to have at least $70,000 in savings and be on the top tax rate to replace what you’ve lost seems like a policy tailor-made to take money from the many and give it to the few who need it least.

But that Nice Man, Mr Key wouldn’t do such a wicked thing, would he?

– Bright Red

81 comments on “Taking from Kiwisavers & giving to the rich”

  1. Funny that, so Kiwi Saver is having problems …. another I told you so moment 😉
    Maybe this is an opportunity for Ben Clark to come out and explain how much of a con KS is?
    Notice the greeds are still backing it, even though ‘we’ have to destroy the planet to make a payout in 47 years. Or 5 for that matter.
    The emperor has no clothes.

  2. PeteG 2

    It’s pathetic trying to call this class war. KiwiSaver favours high earners who can afford to invest and take the substantial government icing.

    If the government contribution is lowered it will affect someone who earns 50k more than it effects someone on 40k. It won’t change anything for those that can’t afford to be in KiwiSaver – mostly lower income earners.

    In tough financial times it is poor economics to borrow money from overseas to give to people to invest. For every billion dollars dished out on KiwiSaver it costs much more in ongoing interest for the government.

    If the government contribution is dropped, say in half, there is still enough financial incentive to stay with KiwiSaver, a 50% return from the start is still an attractive proposition. It will affect me, I’ll get less, but I think it is a sensible move. And it won’t favour me so much over low earners.

    • burt 2.1

      Precisely, but remember you are talking to people who think that a tax cut is the govt giving you money.

      • mickysavage 2.1.1

        But Burt
         
        The last 30 years have seen a huge transfer of wealth from the bottom 90% to the top 10% and more specifically the top 1%.
         
        The capitalist system is failing because of the rapacious greed of the most wealthy.
         
        The tax system is one of the few tools left to try and equalise things slightly.
         
        Your proposal of the sanctioning of outright greed is a recipie for social disorder, rioting and revolution.
         
        There is no justification whatsoever for the extreme differences in wealth and the sooner the human race addresses this the better things will be.
         

        • PeteG 2.1.1.1

          You do realise that the current level of KiwiSaver handout favours those earning $50k or more don’t you?

          • Blighty 2.1.1.1.1

            under Labour, you got the full $1040 subsidy if your income was $26,000 or over. National made it worse. Now they’re going to make it even worse.

            • higherstandard 2.1.1.1.1.1

              Yay free money…… we’re all saved.

              Quick someone ring greece and Spain and ……..

              • rosy

                I thought kiwisaver was introduced to counteract the fact that NZers did not save enough. The incentive changed people’s attitudes. Even for the poor it meant looking at the future instead of focusing only on the present. I haven’t heard anywhere that we’re now saving too much, have you?

            • PeteG 2.1.1.1.1.2

              Wrong. National only changed the minimum employer contribution (which effectively is part of your wages with another name).

              Any change will be a cut to the member tax credit, you get the maximum of that if you earn 50K or more, so reducing it will reduce the tax refund to those earning more.

              • Blighty

                no. National made the following changes:

                * The minimum member contribution rate will reduce from 4% to 2%, and 2% will be the default contribution rate for new employee members from 1 April 2009.
                * The member fee subsidy will be discontinued from 1 April 2009.
                * Compulsory employer contributions will be capped at 2% from 1 April 2009.
                * The employer tax credit will be discontinued from 1 April 2009.
                * The employer superannuation contribution tax exemption will be capped at the compulsory employer contribution of 2% from 1 April 2009. (That is equivalent to 2% of the employee’s gross salary or wages.)
                * The KiwiSaver Act will be amended to make it clear that upon joining KiwiSaver, no employee can have their gross pay reduced as a result of employer contributions. This will ensure that when employees join KiwiSaver, the compulsory contributions from their employer are a genuine addition to their existing pay. The changes will also provide employers and employees with the ability to negotiate their own arrangements in good faith. The Employer Relations Act amendment relating to KiwiSaver will then be obsolete, and will be repealed from the date of assent of the Employment Relations Amendment Bill.
                * The KiwiSaver Act will also be amended to provide a limited exemption from compliance with securities and other related legislation for a limited period so that providers have time to update prospectuses and investment statements, for example.

                reducing the default contribution rate effectively doubled the income that people on that defualt rate need to be earning to get the maximum govt contribution.

                • Lanthanide

                  No, they didn’t, Blighty. They proposed those changes in the 2009 budget, but didn’t actually implement them due to the outcry.

                  You still get the full tax credits if you personally contribute $1042 or more in a given kiwisaver year (ending 30th June), regardless of whether it was from your salary or from top-ups. I can quote you the email from my kiwisaver provider if you need evidence of this.

                  The default rate used to be 4%, and it is now 2%. There’s nothing stopping you from choosing to contribute at 4%. Now your employer will only be forced to match you up to 2%, but that doesn’t mean National have some how fiddled you out of tax credits – they’ve only fiddled you out of employer contributions.

            • Monty 2.1.1.1.1.3

              I know this is going way over your head, but at present 10% of GDP or about $16b is the annual deficit. That is about $4,000 for every man woman and child (so my family annual deficit contribution would be $20,000 and the guy next to me would be $16,000.) Hell – if my personal account was a $20,000 annual shortfall I would cut everything right back to the bone. I would be bringing my spending under control before investing in shares, property, colour TVs, house extensions. The weekly shopping would be on the basis of what is required to get through the week. The “Nice to Haves” would not exist. My Priorty would be shelter, food education and health. Then the other stuff can follow.

              In addition I would look for other ways to improve my lot – seek a better job, seek promotion for existing job, and make my kids earn money for items they want.

              Does the parallel between a personal situation and the government situation make any sense to you socialists?

              Should the government run their accounts the same way?

              • RobC

                Pure gold Monty.

                So I guess helicopter flights to get from photo-op to photo-op, Crusher spending 11k so her hubbie can get to work, seat-warmers in BMWs etc etc are all examples of cutting spending to the bone.

          • mickysavage 2.1.1.1.2

            You do realise that the current level of KiwiSaver handout favours those earning $50k or more don’t you?
            So why the need to make it even more favourable to the wealthy?

             
             
             

            • PeteG 2.1.1.1.2.1

              It won’t. You obviously don’t understand how it works. Reducing the MTC will reduce the tax refund for the higher earners.

              It will make it less favourable for “the wealthy”.

              When you understand it you had better let the Labour strategists know.

              • BS
                 
                The overall effect taking into account tax cuts for the wealthy and cuts to government services is that there is a transfer of wealth from the poor to the rich.  This is another element of it.
                If you have a limited approach and ignore various factors you may reach the conclusion you have but the net effect of all of the decsions is that the wealthy are better off.
                 

              • Draco T Bastard

                Reducing the MTC will reduce the tax refund for the higher earners.

                If it’s reduced in line with inflation rated tax cuts on savings then the rich are going to get far more than the loss will be. The people in the top 0.1% are going to be better off to the tune of thousands of dollars per year.

                As I told you yesterday – National are the party that purposefully puts tax loopholes for the rich into the tax system and this will be one of them.

        • DaveL 2.1.1.2

          “The capitalist system is failing because of the rapacious greed of the most wealthy.”

          Garbage Micky, the biggest problem is the ongoing drain that the welfare system places on the productive sectors of society. The sooner that action is taken to minimize the harm this group is placing on growing NZ’s economy the better.

          • terryg 2.1.1.2.1

            Absolutely. Corporate welfare that is – SCF anyone? AMI? backhand deals for Mediaworks?

          • Blighty 2.1.1.2.2

            So, DaveL. Who are you going to cut from welfare?

            Remember, we need big numbers to make even the slightest dent on governemtn spending – $700m is 1% of what the government spends, and it’s enough to support about 50,000 people on benefits, which just so happens to be about as many extra people who have gone on working age benefits since National took office.

            So, what 50,000 are you going to cut? Are they pensioners? Are they people who lost their jobs through the Great Recession? Are they single parents unable to fund a job? Are they mentally or physically ill?

            50,000, DaveL. Who are the 50,000 who don’t deserve the support they get? Remember, National hasn’t been able to find them, quite the reverse

            • DaveL 2.1.1.2.2.1

              Pensioners and Mentally/Physically Ill I would make no change

              DPB would only be eligible for mothers of children under 12 months of age and only available once every 5 years. If you have a child outside of that time period DPB would only be available for 12 weeks.

              All others would be required to report to a work centre daily by 0830 to receive payment of that days benefit. Child care facilities would be available for mothers with non school age children and would be provided by training currently unemployed mothers in programs such as Porse.

              Once people arrive at the work centre they would be put on to work details designed to ensure that they do not impact on other productive sectors of the economy. The goal wouldn’t be to remove any person is removed from welfare just that the appropriate motivations are set for people to find better choices for themselves.

              • HC

                Ha! Bring in the poor houses with bunk beds in shared rooms for unemployed and work camps to employ those that do not manage to get employment on “the market” within 2 to 3 months? Is that the next step according to your agenda???

                What about bringing in economic policies that “develop” this country into one that creates and keeps skilled people actually getting sufficiently well paid jobs in value added production, scientific and technological development and the creation of modern, energy efficient, affordable and sustainable infrastructures like more public transport, more diversified agricultural and other production and the likes?

                All we get is national cycleways hardly anyone will use, passports to rich migrants that are now also allowed again to “invest” in real estate to qualify for citizenship, tax cuts for high income earners, pressure on sick, invalids and dpb recipients on benefits, questionable policies for mining environmentally sensitive areas and the likes.

                Has your mate Jonkey the Donkey mate of Don Dagger Brash suggested you come and spread your ideas here?

                Kiwi Saver will next be re-labelled into “Kiwi Slaver”, that is likely to be another aspect of it to be announced in the budget soon.

              • joe90

                Pensioners and Mentally/Physically Ill I would make no change

                Best you check a couple of Dims charts ‘o’ the day.

                http://dimpost.files.wordpress.com/2010/08/welfare.png

                http://dimpost.files.wordpress.com/2010/08/wwg21.png

  3. daveo 3

    I’m not rich and I can’t afford to save sweet FA after food and rent but I’m in Kiwisaver because it offered the best savings deal I could get and I plan to use it for a house deposit one day. I get nothing else from the government and my tax cut only went half way to meeting this year’s increase in petrol and food. This is shit.

    • higherstandard 3.1

      “I get nothing else from the government and my tax cut only went half way to meeting this year’s increase in petrol and food. This is shit.”

      D – the taxpayer provides pretty much free healthcare and education (up to tertiary level) to you as well, plus a police force, roads…. infrastructure etc…. to say you get nothing else apart from the kiwisaver contribution is incorrect.

      • daveo 3.1.1

        the taxpayer provides pretty much free healthcare and education (up to tertiary level) to you as well, plus a police force, roads…. infrastructure etc…

        You get that too. How much was your taxcut worth?

        • higherstandard 3.1.1.1

          A few percentage points for my private business and I’m sure you’re familiar with the new personal tax rates.

          • daveo 3.1.1.1.1

            What you’re saying is you and me are doing the same work we were doing before the tax cuts and now you’re better off and I’m worse off because of this government. Now John Key is lining up to take another thousand bucks off me and give you a tax cut on your savings and investments interest and you’re saying that’s just too bad and I should be grateful for roads and high school?

            • higherstandard 3.1.1.1.1.1

              D as per my first comment all I’m saying is that your comment that the government (and by default the taxpayer) gives you nothing is incorrect.

              Your suppositions about me are worthless – I am an avatar on the interwebs

  4. burt 4

    Umm let me think about this… the only people who get the tax payer funded “handout” are people paying enough tax to pay kiwisaver contributions… but suddenly it’s a class was if we stop recycling tax payers money back to the same people who paid it in the first place….. The muddled thinking of the left on display again. No wonder Labour are so f##ked in the polls.

    • higherstandard 4.1

      As usual National and Labour tinker around the edges and change nothing..

      How about some discussion of big ideas Mr/Ms MP and media like capital gains tax, universal benefit as posited by Gareth Morgan, Flat tax etc…… instead the public gorge on the Hone and don side show and Labour and National argue over the merits of helicopters and paint jobs and smiling and waving and the political bloggers all fap fap fap along for the ride.

      Truly we are fucked.

      • terryg 4.1.1

        HigherStandard, alas you are not wrong. WTF is wrong with Labour? do they even read The Standard? Is John Pagani still calling the shots? Has the Labour suffered cabin depressurisation? It sure looks like everyone is asleep and the plane is about to crash.

        Burt, if you want to swear, then fucking swear. Writing f##ked doesnt fool anyone, all you are really doing is making others swear for you.

    • Lanthanide 4.2

      I have to say, I am much more in favour of tax redistribution going via tax credits for kiwisaver contributions than I am for tax redistribution going purely to fund welfare schemes.
      No, I’m not anti-welfare and in no way am I proposing that we replace welfare payments with kiwisaver contributions, but the potential for misuse of the money (which does happen, even if it is only by a very small number of people) is significantly reduced if the money is locked up until the recipient turns 65.

      • terryg 4.2.1

        Lanthanide, I have to agree with you. Otherwise when those people reach retirement age they will have nothing and the state will have to step in anyway. We really suck at saving. me included.

  5. Anthony 5

    It’s a bit of a betrayal really. The incentives were the main attraction to Kiwisaver and made up for the loss of access to your money.

    I also thought the $20 was really the only contribution my generation would actually get for superannuation as there will be no money left when we retire

    Thanks again baby boomers.

    • burt 5.1

      Anthony

      Don’t thank the baby boomers… Thank the Labour govt. They are the ones who started the whole cradle to the grave mentality that resulted in the baby boomers believing the govt that if they paid high tax while working they would be looked after in retirement. Generations of “nobody shall have too much and nobody too little” mentality believed the govt… who’s fault is that ?

      • Blighty 5.1.1

        “nobody shall have too much and nobody too little” mentality

        – what’s wrong with that? It’s not unaffordable. Our GDP is $50,000 pa for each man, woman, and child. Yet most of that is concentrated in the hands of the few and 50% of adults have incomes below $28,000

      • Colonial Viper 5.1.2

        They are the ones who started the whole cradle to the grave mentality

        In a civilised society we would look after our citizens from the cradle to the grave, not abandon our children to live in poverty, let distressed teenage parents without means struggle along, give our new graduates good jobs so that they can stay in their home towns, and make sure our elderly were not eating catfood as a “lifestyle choice”.

        We are living in one of the richest countries in the world – it just so happens that the 100 richest NZ’ers control about $60B in assets while the rest of us (including you burt) are being told to fuck off and live like a serf.

        And you, stupidly, are backing a Government which is slanting the system even more to the rich pricks.

  6. Key could n’t even wait until after the election to gut Kiwisaver. He is just another Muldoon and this is not the first time I have stated this. Next on his list is WFF.

    The lies have come home to roost. Kiwi saver has been touched, WFF will be touched and GST has been increased. The way I see it is three strikes; this government are oblivious to what they campaigned on in 2008

    • Blue 6.1

      Of course they’re oblivious. It was all just lies to get them into Government, and they know that no one is going to hold them to account for all the broken promises.

      The sad thing is that Key is now in that sweet spot where he can pretty much do anything he likes, and people will vote for him anyway. They’ve bought the ‘Labour can’t win’ line and will cheerfully line up at the polls to vote for the guy who is screwing them over.

  7. Green Tea 7

    Seriously? Kiwisaver was always the precusor to the privatisation of superannuation.

  8. Alwyn 8

    You are quite wrong in your statement that Mary cannot get the $1040/annum contribution. If she continues to contribute at the rate of 4%, and that is what was the minimum under the Labour scheme she will still get the entire $1040. It is only if she chose, as the National Government allowed, not forced, her to do would the amount she gets drop to $800.
    At least try and get some of the basic facts right.

    • Lanthanide 8.1

      Yes, Alwyn is correct.

      She makes a top-up of $50 a week, for a total of $3,300 per year into Kiwisaver, well more than the $1042 tax credit and therefore she qualifies for the full $1042 tax credit each year.

      What you are outlining the post, with the tax credit being capped to 2%, was PROPOSED by National in the 2009 budget, however they ended up not implementing it due to the outcry.

      This only makes the rest of your maths worse, however:
      Mary loses $1042 a year in Kiwisaver and gains $12 a year in tax-free interest. Net result: -$1030 a year.
       
      Edit: Actually I see that the $50/week is “savings” contribution, not Kiwisaver. But based on the current system, she should be contributing up to $1042/year in kiwisaver so as to get the full benefit. This actually makes the numbers *even worse* as she gets less than $12/year tax free from interest as she’ll have less in the bank.

      Mary Holm (from Savings Working Group and kiwisaver expert) was on the radio this morning talking about what she thought the changes might be – capping the tax credit for people on higher incomes, or for people over the age of 40. She didn’t mention anything about inflation-guarding on bank deposits.

  9. Bill 9

    Isn’t Kiwi Saver a mechanism whereby I augment my oppressor’s ability to oppress me?

    • Blighty 9.1

      isn’t Kiwisaver a mechanism via which ordinary people can gain control and ownership of a slice of the economy’s capital, rather than simply being labour inputs?

      • Bill 9.1.1

        How do you conclude that control or ownership flow from Kiwi Saver contributions?

  10. M 10

    Kiwisaver is a farce as it’s predicated on future growth and growth is all but over as we’re at peak everything. I would never join KS as control of your money is not in your hands. If we end up with a steady state econmomy I think we’ll be damn lucky.

    At my work young people have joined KS in the hope of saving for a house and I hope they get their money out before it all crashes. If I were to say anything I would have the Cassandra experience so all I can do is sit back and watch it unfold.

    I believe there won’t be superannuation of any kind in the future because the money simply won’t be there and people will literally work until they drop – retirement in the human lifespan is a fairly recent phenomenum and I’m prepared to acknowledge there won’t be any golden retirement years for me – perhaps working fewer hours per week but still working, that’s if there are any jobs. One only has to look to the situation in the US where Social Security is on its last legs and states are bankrupt because of all the flash retirement schemes with massive annuities for the reitrees.

    • Lanthanide 10.1

      I too believe that Kiwisaver probably isn’t going to work out in the long term. But at the same time, 2% of my income + 2% from the employer and up to 2% from the government in tax credits seems like quite a small amount for me to be saving, on the off-chance that the world doesn’t go to hell in a handbasket. Also, the money can be taken out for a home deposit or if you face a huge financial problem, which could easily be much sooner than when you turn 65.
       
      Gareth Morgan Kiwisaver (my provider) first and foremost look out to retain your wealth before growing it. That means they invest in shares that are more likely to weather a bad storm – and it shows when you look at their performance vs other providers during the 08-09 crash.
       
      So ultimately I see kiwisaver as a gamble. A pretty cheap one that may pay out great rewards in the long run, so I’ll take it.

      • aj 10.1.1

        What I see missing from this thread is the word ‘Australia’ which has a far more encompassing super scheme.

        I guess if it isn’t going to ‘work out in the long term’ for us them it won’t for them? yeah, right.

        Meantime they have a massive pool of investment savings that we can only envy. Along with their wages. Until the Nat’s starting tinkering with Kiwisaver, most commentators agreed that we were doing baby steps in the right direction. Now the backsliding has reached the speed of light.

        If the saving public take the proposed changes lying down then I hold no hope for them, and personally I find the cavalier manner in which Key breaks promises quite amoral

  11. NZ’s productive sector? Ha Ha. Think of NZ as heading to Africa where China will own the mines, farms, and run the retail sector. Think Fiji. China will contract out some slave labour but bring in their own peripatetic managers and skilled workers. Key and Co run the local rentier regime wrapped in the flag and keeping crowd control. The All Blacks are THE bench mark for export performance. Aotearoa used to be a book entry in the multinationals accounts, now its no more than a blip on the HSBC money market screen. And you lot are talking taxation, savings, and the growing gap between rich and poor. Like mechanics who are working on the car as it plunges into the ravine. Great South Islands we are now called. And our big brothers will go to war over who should own us.

  12. Zaphod Beeblebrox 12

    As I recall JK was promoting Kiwisaver funds as the buyers of our soon to be sold down SOE’s. If you take away any incentive for people to join Kiwisaver (as opposed to paying off their house) how is that going to ever happen?

    Looks like in order to retain our ownership in NZ SOE’s we will have to invest in a foreign equity fund in Australia, US or China- but then again so can everyone else on th planet.

  13. Kaplan 13

    Yet another promise ready to be broken by this government
    I see there is a new group on the interwebs, hopefully it can generate some visibility and keep the issue live.
    Leave Kiwisaver Alone

    • PeteG 13.1

      How much of this opposition to any changes is due to reasoned concern, and how much is due to pure selfishness?

      We don’t even know what changes are being proposed yet.

      • Zaphod Beeblebrox 13.1.1

        Lets face it. Its bad policy to reduce our savings when we desperately need to save more and we need local capital for our businesses. That way assets stay in NZ and the profits don’t get exported. Even Key recognised this when he suggested that KiwiSaver funds could help purchase some of our SOEs. Or are you going to argue against that?

        • PeteG 13.1.1.1

          I won’t argue against that. But it ‘s also bad policy to borrow money to put into savings.

          • KJT 13.1.1.1.1

            It is also bad policy to cut Government income by cutting taxes to the well off.

          • lprent 13.1.1.1.2

            It is also bad policy to pay for tax-cuts by borrowing.

            That was quite evidently going to happen well prior to the election. Hell – I was warning that was the likely result to Cullen’s tax cuts when those were announced (the economic horizon looked pretty dark even then)..

            Tax cuts are just about the worst possible way to pump a stimulus into the economy. But for some reason these morons seem to think that it is preferable to borrow for a lousy lousy stimulus. It isn’t like any of the tax cuts appear to be going into productive investments.

            Now they want to see how much damage they can do to the private savings programmes as well.

            • PeteG 13.1.1.1.2.1

              It’s also bad policy to let effective tax rates keep creeping up for eight years.

              It isn’t like any of the tax cuts appear to be going into productive investments.

              Do you know that? Would things be better or worse now if the Labour tax cuts were cancelled and National didn’t change them?

            • MrSmith 13.1.1.1.2.2

              But isn’t Billy goat (sorry PeteG) Billy English promising us a saving based recovery ?????  Billy goat said “Savings-based recovery set to pick up in 2011” I recall, can’t wait, booking my tickets for Fiji tomorrow

          • Zaphod Beeblebrox 13.1.1.1.3

            Not really.

            The money the government invests encourages individuals to save. Instead of putting it into property, boats, personal jewelry it goes into kiwi companies and infrastructure which means less borrowing from o/s and less profit flow off shore.

            Its also anti-inflationary as the money is not spent straight away so demand is not spiked nor does it contribute to property bubbles. The money doesn’t just disappear into thin air like a foreign holiday or in a property boom.

            The Australians worked all this out 20 years ago. Look at their managed funds portfolios. It invests all over the world (incl NZ) bringing profits back to Australia and reducing their current account deficit. Singapore does even better. Do you see the Australian government pulling back on Superannuation because they have a deficit at the moment? No way- they want to see everybody self-sufficient in retirement as they don’t want the government indebted to future retirees when the baby boomers retire.

            The current crowd in charge of running our country have no concept of the future, no understanding that in a growing economy you need debt to grow some more and no thought for the hole they are creating for the next generation. They think reducing governemnt debt is all they have to do. Then the free market fairies will spread pixie dust over NZ and everything will be OK.

        • burt 13.1.1.2

          Simple question: Do you need tax payers money given to you so you can save ?

          • IrishBill 13.1.1.2.1

            For many Kiwis the answer is yes. Hint: it’s because the wages are so too low to live and save.

            Of course we could always introduce an award system like Australia has and then add a substantial compulsory employer superannuation system like Australia has and then wages and saving would be just fine.

            I’m sure you’d prefer a system like that, eh Burt?

            • burt 13.1.1.2.1.1

              IrishBill

              What a mess socialism has made eh. Tax the low earners hard and recycle it back to them so they can save…. Did you lovers of nanny state think of the long term consequences when you swallowed the bait and followed the lolly scramble ?

              • Zaphod Beeblebrox

                Encouraging individuals to save is not socialism. Socialism is the government buying businesses and the means of production like err Finance Companies like SCF, Insurance Companies like AMI and starting their own irrigation schemes like announced today. If you don’t like Socialism (fair enough too) complain about the real Socialists.

              • Colonial Viper

                burt has no idea what socialism is

                Except socialism for the wealthy of course.

                • felix

                  Poor old burt experienced the jackboot of socialist oppression in the 1970s when the Cook Strait stewards went on strike and ruined his holiday.

                  Never set foot on a boat again. Never forget.

          • PeteG 13.1.1.2.2

            Do you need tax payers money given to you so you can save ?

            I do. Without another significant dollop of outside contribution I’d be better off paying more off my mortgage. If the MTC drops too much I will probably take a KiwiSaver holiday – if I can negotiate my employer contribution into a salary rise.

            • burt 13.1.1.2.2.1

              So rather than do what is fiscally responsible and focus on reducing your debt you happily accept other peoples money now for your future life style – for the time you will have a freehold house and savings courtesy of yesterdays tax payers. That, in my book, puts you in the same category as a person who could work but chooses not to.

              • PeteG

                I think I was going to be able to divert some of my KiwiSaver into paying off mortgage but National squashed that?

                If I still have any mortgage when I retire I’ll be able to pay it off with some of my KiwiSaver funds. It’s a reasonable risk to take to do it that way.

                The KiwiSaver MTC was a tax cut that wasn’t called a tax cut – Cullen wasn’t able to do “tax cuts” until Labour were staring down the barrel and out of ammunition. If I didn’t take my cut I’d miss out on something that others got. I think it is very different to choosing not to work, I still work, and I couldn’t live off $1043 per year.

                • burt

                  Cullen could have given you a tax cut, instead he decided that paying of the countrys debt was a good trade off for increasing the consumer debt.

                  Cullen’s pluck the goose with the least amount of hissing ideology keep the take home wages low, it paid off the nations credit card while the sheeple low on cash lushed up on expanding property values and readily available consumer finance.

                  Hell half of the sheeple probably only noticed when filling out finance applications that the numbers kept getting bigger and bigger so they thought they were getting more wealthy. They probably missed the fact that the numbers were getting closer together rather than further apart.

                  Then the complete nob turns around and says he was a prudent financial manager when consumer finance levers are ridiculous, houses are over valued, the economy is stagnant, unemployment is growing and Treasury are forecasting a decade of deficits.

                  But hey, KiwiSaver isn’t making saving for retirement any more affordable, it’s just making it more rewarding than paying off your mortgage. Is this really appropriate use of tax payers money ?

                  • PeteG

                    I think some incentive to get people to save is good, but I always thought KiwiSaver was too generous when it started, that’s been proven by the much larger than expected uptake.

                    And there should be more options for mortgage diversion and buying a house.

                    CV won’t be bothering me, usually too over the top to be taken seriously – as much chance of his preferences getting anywhere near happening as the Mana party.

                • burt

                  Actually PeteG, if I were you I would be watching my back for Colonial Viper about now. CV will be cooking up a storm about you being a rich prick who was able to rearrange your affairs such that you could reduce the actual tax you paid at the expense of the masses who can’t afford a mortgage.

  14. Tim 14

    I guess we are going to catch Australia by not implementing any of their policies.

    This is what I don’t get about the right. They stand in a stadium and tell us this number of young people are heading to Australia, but then do everything they can to implement policies that are so different from what you would receive in Australia. Are they really that thick? Surely not?

    • KJT 14.1

      Of course they are not thick.
      All they want is a second term so they can continue with the robbery of the 80’s and 90’s. When there is nothing left to steal then they will let the left back in to build it all up again. So they can steal it all again 9 years down the track.

  15. burt 15

    In breaking news: Key announces that the changes to KiwiSaver are to make it the same as the MPs super scheme. Every $ you contribute will be matched with $6 from the gummit.

  16. Rob 16

    Correct me if I am wrong with those saying Kiwisaver predominantly favours the rich. Doesn’t the cap in the level of incentive at $1040 mean that actually all of those who earn less than the cap are more favoured than those above? Anyone saving over 1k a year in Kiwisaver doesn’t actually get much extra benefit for that extra cash saved.

    • Lanthanide 16.1

      It’s pretty simple. Who is most able to take advantage of the $1042 tax credits per year, given that you have to contribute at least $1042 in a year to get them?

      Someone earning $20,000/year, or someone earning $200,000/year?

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