KiwiSaver is a dog of a policy, it’s poor policies like this that drag New Zealand to third world status. Eventually.

1) Is more saving good for now?
Grendel, your 100 odd clients may be contributing to the 9-19% new savings that we found.
But don’t you ask if more savings is better for them?
We found that the new savers are more likely to be poorer than the “reshufflers”, and given that their current income is relatively low and that NZ Super payments are so generous, they shouldn’t be saving at all.

Take an example:
You are living a student life on 20k/year. Your nanny says that if you only spend 19k and save 1k, she’ll give you 2k but you can’t touch the 3k until 10 years later. You want to catch the freebie so you save 1k. But you anticipate that in 10 years you’ll be on an executive salary of 150k. Did setting aside 1k make you better off?

No, you would be much better if your nanny gave you 2k to spend when you are a student.

2) Is more saving good for the future?
Professor John Gibson commented in a Dominion Post article on Tuesday that
“KiwiSaver is not about saving for retirement — it’s about giving a tax cut to Kiwis that they can’t spend until they retire.”

Dr Cullen’s been saying that if you *give* people tax cuts now, they would spend, and that would be inflationary.

I don’t subscribe to the theory of tax cuts being inflationary. But if Dr Cullen truly believes so, shouldn’t he also think that KiwiSaver will cause inflationary pressures in the future, when today savers withdraw their savings?

Remember you can’t eat KiwiSaver, you can only eat goods and services. You can save heaps now but if young people in the future don’t work, your enormous KiwiSaver balances will be useless. Living standards of the aged are better addressed by policies that promote productivity than those that promote savings. Look what has happened to NZ productivity:

3) Is Super Guarantee scheme what makes Oz a richer country than NZ?
Rocket Boy, don’t be so enthusiastic about Australia’s compulsory workplace saving scheme. Look at this

New Zealand

Australia

US

Other questions:

The administration and compliance costs of KiwiSaver
Rocket Boy, on top of the fees you pay your AMP fund provider, enormous costs will be required to collect taxes from David Farrar and distribute it back to David Farrar’s and other’s KiwiSaver accounts and to make sure that myriads of rules are followed.

And this already excludes the so-called deadweight costs of taxation, which Treasury conservatively estimates to be about 20% of the taxes raised.

Timing of study
Ironically, the estimates from “pre-mature” are consistent with Treasury forecasts. Treasury estimates that KiwiSaver will decrease national savings.

See Budget Economic & Fiscal Update 2007, the table at the end of page 79 http://www.treasury.govt.nz/budget/forecasts/befu2007

Does saving cause growth?
As a small open economy, if NZ doesn’t save enough, it can borrow to invest. If it can’t grow, it’s because it has an investment problem, not a saving problem.

This saving good, spending bad, exports good, imports bad stuff is all fallacious. People save to spend, people know best when best to save/spend for themselves. Why do government planners think they know better than ordinary people what’s good for them?

1. To reduce inflation by removing money from the economy, that would otherwise be spent on goods and services (with the addition that Employer contributions would dampen future pay rises as well), and

2. To provide for our own superannuation as the Government based super scheme will become untenable in the near future as more baby boomers retire and live longer.

In that respect it meets these objectives very well.

Yep – I didn’t say that kiwisaver is perfect. Just that it’s better than making earnings on interest tax-free.

1) Is more saving good for now?
Grendel, your 100 odd clients may be contributing to the 9-19% new savings that we found.
But don’t you ask if more savings is better for them?
We found that the new savers are more likely to be poorer than the “reshufflers”, and given that their current income is relatively low and that NZ Super payments are so generous, they shouldn’t be saving at all.

Take an example:
You are living a student life on 20k/year. Your nanny says that if you only spend 19k and save 1k, she’ll give you 2k but you can’t touch the 3k until 10 years later. You want to catch the freebie so you save 1k. But you anticipate that in 10 years you’ll be on an executive salary of 150k. Did setting aside 1k make you better off?

No, you would be much better if your nanny gave you 2k to spend when you are a student.

2) Is more saving good for the future?
Professor John Gibson commented in a Dominion Post article on Tuesday that
“KiwiSaver is not about saving for retirement — it’s about giving a tax cut to Kiwis that they can’t spend until they retire.”

Dr Cullen’s been saying that if you *give* people tax cuts now, they would spend, and that would be inflationary.

I don’t subscribe to the theory of tax cuts being inflationary. But if Dr Cullen truly believes so, shouldn’t he also think that KiwiSaver will cause inflationary pressures in the future, when today savers withdraw their savings?

Remember you can’t eat KiwiSaver, you can only eat goods and services. You can save heaps now but if young people in the future don’t work, your enormous KiwiSaver balances will be useless. Living standards of the aged are better addressed by policies that promote productivity than those that promote savings. Look what has happened to NZ productivity:

http://gallery.lv5.org/Econ/productivity

3) Is Super Guarantee scheme what makes Oz a richer country than NZ?
Rocket Boy, don’t be so enthusiastic about Australia’s compulsory workplace saving scheme. Look at this

New Zealand
http://gallery.lv5.org/Econ/nz

Australia
http://gallery.lv5.org/Econ/aus

US
http://gallery.lv5.org/Econ/usa

Other questions:

The administration and compliance costs of KiwiSaver
Rocket Boy, on top of the fees you pay your AMP fund provider, enormous costs will be required to collect taxes from David Farrar and distribute it back to David Farrar’s and other’s KiwiSaver accounts and to make sure that myriads of rules are followed.

And this already excludes the so-called deadweight costs of taxation, which Treasury conservatively estimates to be about 20% of the taxes raised.

Timing of study
Ironically, the estimates from “pre-mature” are consistent with Treasury forecasts. Treasury estimates that KiwiSaver will decrease national savings.

See Budget Economic & Fiscal Update 2007, the table at the end of page 79 http://www.treasury.govt.nz/budget/forecasts/befu2007

Does saving cause growth?
As a small open economy, if NZ doesn’t save enough, it can borrow to invest. If it can’t grow, it’s because it has an investment problem, not a saving problem.

This saving good, spending bad, exports good, imports bad stuff is all fallacious. People save to spend, people know best when best to save/spend for themselves. Why do government planners think they know better than ordinary people what’s good for them?

Well you can get something called ‘mortgage diversion’ emmess, but may or may not apply to your situation.

Because NZ is already one of the most inequitable societies in the developed world, and introducing that would make it even more inequitable – and all the social problems that accompany inequality would intensify. See my blog for just one example.

http://rogernome.blogspot.com/2007/11/link-between-imprisonment-rates-and.html

Well, Labour’s Norman Kirk did introduce a similar scheme, though National’s Muldoon abolished it, and squandered its proceedings with an election-buying lolly scramble (probably tax cuts). Sound familiar?

Spoken like a true plutocrat.

Yep, thanks to their forward-thinking super saving scheme Australia now has one of the highest “net worth per capita” figures in the world – so how is this a bad thing?

Also worth noting is that kiwisaver has only just gotten up and running, so it’s going take a few years before everyone who’s going to come on board, finally does. Also, the employer contribution only kicked in at the start of April (adding an extra 3.6 billion per year in savings). Presumably, this study doesn’t take this into account.

I wish this scheme had been around 35 years ago as my generation would now have more than adequate retirement savings and more of NZ business would be owned by NZers rather than offshore.

IMHO in 30 years time the Socilaists will be fondly remembered for introducing KiwiSaver And this come from one of their biggest critics.

DUHHH. DUHHHH. DUHHHH.

many are using it as a chance to get governemtn and employer funding while also putting more into their mortgage (not that any of them were paying extra now, so this has been a catalyst to make them think about their finances).

for me its that it actually gets people thinking about saving and making a decision to do something.

and the people i have been seeing are from a wide array of occupations etc. from Supermarket checkout staff, to bicycle salesmen, to graphic designers to business owners. they are all about the same and have typically been saving very little and kiwisaver will be more saving than they used to do. sad but at least now they are doing something.

AL

Funny how one of the competitive advantages that Australia has is the huge amount of money that they have saved in compulsory retirement funds (and thus available for investment) and when the government implements something similar here is seen as having little additional value.