“Willis’ Government was elected to make hard decisions—ending Government funded KiwiSaver subsidies is exactly one of them” said Sam Warren, a spokesman for the Taxpayers’ Union.
“Make no mistake, the subsidies costs taxpayers hundreds of millions each year, diverting desperately needed funds from other services or urgently needed debt repayments.”
“A product of the Fifth Labour Government back in 2007, the subsidies hoped to encourage KiwiSaver participation and contributions—but with that comes its own problems.”
“Now that membership levels are near-universal, the subsidies themselves are redundant. They also distort behaviour as individuals with investments and savings elsewhere will opt for lump contributions annually to receive the $521 payment by government.”
“The programme also operates as a private savings scheme, making the subsidy a wealth transfer from taxpayers to savers.”
That will include taxpayers who can’t afford to save.
“Most will agree that propping up private savings is completely inefficient—the government should straight out prioritise tax relive and allow individuals to save independently.”
“Times are incredibly tough, and the books are in dire straights. It’s a hard decision, but it’s the right one to get the economy back in shape.”
People not already in KiwiSaver schemes are most likely to be those who have other ways of investing and saving for their retirements or those who are too poor to save. Subsidies won’t encourage either to save and those already saving don’t need the encouragement of a taxpayer funded subsidy.
In the future there will be two groups of people – those who have what they’ve saved to use in their retirement and those who don’t. The former will be people who forwent spending when they were young to give themselves better options after retirement. The latter group will include those who didn’t have the means to save when they were younger. Neither of those should be taxed now to subsidise other people’s KiwiSaver accounts.
Axing the subsidies will save many millions of dollars there are far greater needs than helping those already helping themselves.
Ele Ludemann is a North Otago farmer and journalist, who blogs HERE - where this article was sourced.
4 comments:
It’s funny to read this today because this is exactly what I did!
I am motivated by the Kerry packer philosophy….”why would I allow the government to keep a penny more of my tax dollars than I absolutely have to? Look at how you treat my [tax] dollars!”
It’s a brilliant speech he made to a royal commission that was set up to investigate why he had paid only a couple of dollars in income tax.
Well worth your time.
https://youtu.be/EVIOmU3l0Zo
The short guts of his speech can be watched here - but the long version is worth watching
https://youtu.be/DBg7DnQjjcY
Have a great day everyone and thankyou Ele for reminding me of this great moment in Aussie history.
I want my subsidy.
If it is taken away it will only be used to prop up the welfare system.
That 500 bucks a year is the only thing I get back from the government.
What will that support otherwise?
someone too lazy to get out of bed to pick apples for a couple of days? To hell with that.
You think some are "too poor to save"?! I'd argue more likely too damn tired.
And who would trust a government to "divert desperately needed funds for other urgent services"?
Dream on.
Anon;12:42 Its NOT your subsidy, it is a gift from NZ taxpayers
My tax paid for that "gift" and I only want a tiny portion back.
That money is mine. I worked for it and your hiding behind a make-believe egalitarian spirit.
The finance minister and those who think this idea has any merit are just miserable and deluded.
I'd rather continue to help those who are helping themselves to send a message to others to get off their backsides.
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