Saturday, June 21, 2014

A Couple Of Questions Claire.



Dr Claire Matthews of Massey University, described as a "Kiwi Saver Specialist" by the NZ Herald, has a proposal to make the retirement saving fund, Kiwisaver,  compulsory for all New Zealanders.

Well Doc more than a couple in fact.

Nice timing, so for starters where do you sit in the political world Doc, as in case you overlooked it there is a General Election set for us in three months and the major players are holding different views around superannuation. I would hate to think my cynical mind might suspect any degree of you advocating for the position of a particular political policy with your thinly disguised socialist intervention.

As many of your equally common sense simplistic social scientists portray, massive numbers of NZ families are at present living in what is erroneously termed poverty while enjoying government largesse how do you propose to extract 10% of their claimed as already inadequate income and not make that social problem significantly bigger.

Many New Zealanders imbued with an entrepreneurial spirit at present can spend years if not decades using every spare dollar earned to build their dream that can turn into a very successful retirement fund. They draw incredibly low incomes so how long before some egghead decides they are not saving enough therefore must "Pay" more thereby putting a very large impediment in the way of what has and still is building our nation.

Then we have the large body of educated souls who head offshore sometimes in part to avoid their student loan obligations, who then return at the late stage of child rearing age or return at the end of their working lives, having avoided partially or totally the  proposed compulsory net you advocate for. People who often get a nice assistance from the taxpayer for housing at present.

Family reunification immigrants who also will line up for Kiwi Saver  equivalent survival rations.

The indigent and the the criminals who never visit the IRD who will gather up their 10% plus employer contributions.

So let me try and understand what you are really proposing here.
You are advocating that everyone pay a 10% additional tax, not to the treasury but to one of a bunch of fund managers, the numbers of whom will explode exponentially, and already in their limited numbers have shown a widely differing degree of competence and fiduciary duty.
In addition to that massive removal of discretionary spending,  you will have a plan to replicate the employer contributions with an additional rise in benefits of 10% and make the compulsory levy on the self employed 20% effectively raising them to supertax levels .
You will still require a Tax funded benefit to support the indigent, the family reunification immigrants and then there will be another bunch of victims of failures of funds from incompetence, fraud or sheer bad luck.
Surely you wont want anyone left in the gutter.

It sounds so good to claim how big the socialist dream schemes of some overseas jurisdictions have grown but has anyone actually studied how effective they have been in success measured against averages and mean performance of private capital management out comes.

It sounds too good to be true Claire and in the current climate it probably is, then the question, why now.

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