OnPoint by Keith Ng

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OnPoint: If Wishes Were Horses...

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  • Che Tibby,

    indeed. what do you call money you take from your wages and put into a bank account to spend later?

    clue: "savings". some also call it "offset spending".

    serious question though: won't this also be revenue positive for the govt? increasing kiwisaver employer contributions is shortly to incur a 33% tax isn't it?

    the back of an envelope • Since Nov 2006 • 2026 posts Report Reply

  • Rich of Observationz,

    The idea of compulsory savings is predicated on the concept that money placed on the stock markets today, or even in a bank, will be around and able to purchase things in 30, 40 or 50 years time. I'm not convinced that's reasonable - aren't we just being forced to prop up global corporate capitalism by this policy?

    Back in Wellington • Since Nov 2006 • 4484 posts Report Reply

  • Che Tibby,

    rich:

    whut?

    the back of an envelope • Since Nov 2006 • 2026 posts Report Reply

  • Brendon Steen,

    Rich,

    If people aren't comfortable with the kinds of KiwiSaver schemes that are currently available either because they're worried about risk or because they're that anti-capitalist, then Labour are talking about creating an alternative option where people can instead invest in government bonds instead of managed funds.

    It's also worth considering that as the number of KiwiSaver members and the amount of money under management increases the variety of schemes available is likely to increase.

    Auckland • Since Sep 2011 • 9 posts Report Reply

  • DexterX,

    Lets make it compulsory to prop up the Flying Monkey Deposits Industry (Managed Fund Industry) so that when they spank those "Flying Monkey Deposits" in your face and you get to live with that failure - then all the monkey depositors can run to the taxpayer to save them.

    What blows about the "Flying Monkey Deposits Industry” is that most of what they make from doing what they do they put into prime commercial real estate ventures - Flying Monkey Depositors may be stupid - but the Flying Monkey Deposits Industry is not.

    Like - Wow total wipe-out.

    Auckland • Since Nov 2006 • 1209 posts Report Reply

  • mattgeeknz,

    I trust a well-regulated KiwiSaver provider that properly discloses its fees and investment strategy to look after my retirement savings than I do the government. After all, aside from 17b or so the government has in the Cullen fund (equivalent to two full years of super, and that's it) there are no savings to pay for current retirees let alone future ones. Our taxes have all been spent on roads, schools, hospitals and - unfortunately - election bribes like interest-free student loans. With no government in power for long it's just not a safe place to keep savings. Compulsory super has worked in Australia and elsewhere, both the soft and hard versions. There's no reason it won't work for us.

    If capitalism collapses, as Rich ponders, we'll have bigger problems to worry about than savings. But I'll tell you what: without a change in attitude to national savings and retirement affordability, a debt-related collapse has a much greater prospect of happening. Personally, I think we've got an opportunity to tackle this stuff now, hard, and come out in the front pack of the OECD. We have a great advantage in that we're not greatly exposed to the profligacy of the European banks like the rest of the world. I think that's a head start, and it seems to me like we're at great risk of squandering it if we just muddle through. I don't care which party takes us forward as long as we are indeed moving forward. I do think Labour deserves credit for starting an important debate today. We need to have it.

    DexterX: there's no way I'd invest in a KiwiSaver fund that was up to its eyeballs in punts on commercial real estate. If you do your research you don't have to either.

    Wellington • Since Mar 2010 • 22 posts Report Reply

  • Sacha,

    employers will offset what they have to pay into KiwiSaver by taking it out of wages

    Because they are too incompetent to increase productivity by a tiny amount each year any other way? Good to see how little the Nats' pet muckspreader thinks of their consitituents. And how thoroughly unambitious and timid this bunch of yesterday's men really are.

    Ak • Since May 2008 • 16838 posts Report Reply

  • DexterX, in reply to mattgeeknz,

    DexterX: there's no way I'd invest in a KiwiSaver fund that was up to its eyeballs in punts on commercial real estate. If you do your research you don't have to either.

    What I am saying is that investment in prime realty is what the coporations do with what they make offf the Flying Monkey Depositors.

    I trust a well-regulated KiwiSaver provider that properly discloses its fees and investment strategy to look after my retirement savings than I do the government..

    I don't trust either - I have worked in the industry.

    Auckland • Since Nov 2006 • 1209 posts Report Reply

  • Islander,

    people have money to save?
    and to SPARE?
    Geeez, really?
    I dont, and havent, for the past decade-
    you fellas are entirely out of my non-income bracket-

    Big O, Mahitahi, Te Wahi … • Since Feb 2007 • 5643 posts Report Reply

  • BenWilson,

    It took me a while to get used to the idea of compulsory savings in Oz. But it really is my money sitting over there in an account. Surprisingly large sum, considering I was only working for Australians for 3 years. Australia has the highest proportion of small investors in the stockmarket in the world, and it's one of the main things that's driven their economy so much further than ours. It's a bloody good idea, which is why they keep voting to raise the level of the contributions.

    Of course, to some extent, it is supporting capitalism. But at least it's supporting functional capitalism that makes it's own people richer.

    It also took bugger all time to make a big impact, they only started the scheme in the early 90s.

    If the only good outcome of this election is that compulsory savings are squarely on the table, then I'll have some hopes that my kids might live in a wealthier NZ than I am.

    Auckland • Since Nov 2006 • 8675 posts Report Reply

  • Paul Campbell,

    Currently employer contributions up to the minimum 2% are not taxed (anything past 2% is taxed) - anyone know if the Labour proposal taxes employer contributions?

    (if not then it's a net win an Farrar is full of shit comparing a tax free income with a taxed one)

    Dunedin • Since Nov 2006 • 2188 posts Report Reply

  • Che Tibby,

    i think that arguing against capitalism is a little silly tbh. it's capitalism that gave us the computers we have the free time to type on, and all the toys that make our lives easier.

    unfettered capitalism in the form of de/unregulated merchant bankers and currency speculators otoh? capital-B Bad. they produce nothing, "add value" in a fashion that is little more than creating inflation, and hoard vast amounts of cash as rewards for their "work".

    the back of an envelope • Since Nov 2006 • 2026 posts Report Reply

  • Rich of Observationz,

    properly discloses its fees and investment strategy

    And doesn't for instance, recycle those fees into the fund to inflate the valuation, as Hujlich has been charged with. I'm amazed that Brash and Banks have avoided prosecution on that - as directors they should be liable, but I guess Key doesn't want to see his coalition partners go down.

    Back in Wellington • Since Nov 2006 • 4484 posts Report Reply

  • DexterX,

    Listen Capitalism has been doing some pretty heavy things over the years right, and it has got to start getting beautiful or this planet is headed for oblivion.

    Blaming Capitalism is like being afraid of the dark.

    Auckland • Since Nov 2006 • 1209 posts Report Reply

  • George Darroch,

    people have money to save?
    and to SPARE?
    Geeez, really?
    I dont, and havent, for the past decade-
    you fellas are entirely out of my non-income bracket-

    Me neither. I've saved about -$34,000 in the last decade.

    The People's Republic of … • Since Nov 2006 • 2136 posts Report Reply

  • Rich of Observationz,

    it’s capitalism that gave us the computers we have the free time to type on, and all the toys that make our lives easier

    Because its all about the toyz…

    I wouldn’t want to relitigate this, preferring that people just watch history unfurl.

    However, I’d just point out that the good stuff peaked at some point in the early 80’s. As a young tech in 1988, my grateful employer flew me around business class and furnished me with a brand new, very whizzy company car. I don’t think any geeks in their 20’s receive those sort of things nowadays – and the majority of other middle class jobs are in similar decline.

    Globalisation and resource exhaustion are rapidly eating away that cushion of mass affluence that enabled capitalism to dodge the Marxian bullet.

    Back in Wellington • Since Nov 2006 • 4484 posts Report Reply

  • DeepRed, in reply to Che Tibby,

    i think that arguing against capitalism is a little silly tbh. it's capitalism that gave us the computers we have the free time to type on, and all the toys that make our lives easier.

    unfettered capitalism in the form of de/unregulated merchant bankers and currency speculators otoh? capital-B Bad. they produce nothing, "add value" in a fashion that is little more than creating inflation, and hoard vast amounts of cash as rewards for their "work".

    I recently had dinner with an under-employed close friend of mine, who has a PhD in bio-chem. He can't even get work in Australia, and America and Europe typically prioritise grads from Stanford and Cambridge/Sorbonne respectively. So he's had little choice but to freelance.

    We basically both agreed that most of the FIRE sector - and not just in NZ - basically got to where it is now, not by innovating, but by parasiting off the productive sector.

    The southernmost capital … • Since Nov 2006 • 4403 posts Report Reply

  • DeepRed, in reply to Rich of Observationz,

    Globalisation and resource exhaustion are rapidly eating away that cushion of mass affluence that enabled capitalism to dodge the Marxian bullet.

    It also coincides with the hyper-commercialisation of products and services that used to be regarded as public goods, like housing, energy, and healthcare.

    The southernmost capital … • Since Nov 2006 • 4403 posts Report Reply

  • Gareth Ward,

    If it's going to compulsory (a-f*#%^n-men) then why continue with the employee/employer contribution smoke and mirrors? It's all the same money from the same source, no?

    And regarding the "lower wages" lines, unfortunately Farrar and others know full well that telling people they'll get less money right now in the hand unfortunately will play very very well with a large percentage of the population. But his Herald column is actually pretty bang-on. Yes he continues with the "but people want to start their own business with that money otherwise" fiscal-heart-strings crap but his overall comment theme that the total position of NZ Super plus Kiwisaver remains overly expensive and poorly targeted is one I agree with. And he seems to share my kudos for Labour for having the balls to finally grab that rail and kick us off down the path of fixing it.

    Auckland, NZ • Since Mar 2007 • 1722 posts Report Reply

  • Paul Campbell,

    the difference at the moment is that the size of the employee portion is determined by the employee (I choose to put 8% in). The employer portion is also tax free

    Dunedin • Since Nov 2006 • 2188 posts Report Reply

  • Andrew C,

    Over on Kiwiblog, Farrar is trying to claim that "Labour are officially campaigning for lower wages", because employers will offset what they have to pay into KiwiSaver by taking it out of wages.

    The compulsory contributions are going to increase over time (did Goff say 7%? I was distracted when he was on the radio talking about it), and employers might well not have room to additionally add in the hand wages rises on top of this.

    So in the hand wages might stay static, or perhaps increase at a lower rate than they otherwise would.

    While you are right Keith that the employee is still getting the money, not having it available to spend in the here-and-now is going to feel like they are going backwards wage wise for some people. While that wasn't what Farrar was meaning, I think he's got at least some of the gist right.

    Auckland • Since May 2008 • 148 posts Report Reply

  • Sacha, in reply to Gareth Ward,

    But his Herald column is actually pretty bang-on.

    Link.

    Ak • Since May 2008 • 16838 posts Report Reply

  • Gareth Ward, in reply to Paul Campbell,

    the difference at the moment is that the size of the employee portion is determined by the employee (I choose to put 8% in). The employer portion is also tax free

    Right, your first point there is just the same as having a 9%-of-salary minimum contribution with the optional right to invest more of your own salary into the fund (as per Australia although it makes more sense there as they tax-advantage retirement savings). Your second point is an interesting one, just seems to make the whole thing overly complex.

    Should be 9% minimum contribution, tax-advantaged savings and no other incentive*. i.e Australian. And given that Labour is now advocating the more-like-Australian GST model, a more-like-Australian progressive taxation rates, a more-like-Australian CGT it would seem to fit well...

    *But this is still an excellent start and I understand the limitations to a complete overhaul in one policy statement

    Auckland, NZ • Since Mar 2007 • 1722 posts Report Reply

  • Gareth Ward,

    Thanks Sacha

    Auckland, NZ • Since Mar 2007 • 1722 posts Report Reply

  • Sacha, in reply to Sacha,

    Farrar is misleading about this at least:

    However the higher employer contribution will result in lower wages (Labour's policy acknowledges this explicitly) and fewer jobs.

    His 'fear' only makes sense in a more laissez faire labour market like the Nats delight in.

    The Labour package from what I've read also contains negotiated industry wage bargaining so the conversation about the reasonable sharing of profit between workers and investors/owners is more out in the open. If bosses want to take that extra 0.5% a year from workers' wages they'll at least need to front up about it.

    Ak • Since May 2008 • 16838 posts Report Reply

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