Roughan on Super Fund
February 28th, 2009 at 11:04 am by David FarrarJohn Roughan writes:
If your income is down in the recession and you are taking on debt to maintain the family’s living standard, would you borrow a bit more to put into a superannuation fund?
Nor would I. Nor would John Key, Bill English, Phil Goff, Jim Anderton or Peter Dunne, I suspect.
Exactly.
Goff, smelling fear, declared Labour opposed to suspension and called on the Government to make its position clear. Anderton called it “raiding the piggy bank”. Dunne, minister of tax collecting, declared it “a very bad idea”.
All of them know it would be sensible.
Yes I refuse to believe Phil Goff is that stupid. He knows it is the sensible thing to do, and why Cullen designed the scheme to allow a contributions suspension. But he is getting a bit desperate with his ratings, so punted for stupidity, even though he knows better.
Deficit adds to the debt loaded on future taxpayers, unless inflation erodes its value in the meantime. Either way, its a thankless legacy.
To increase public debt by a billion dollars and put that money in a superannuation fund risks presenting our tax-paying children with costs that could exceed the fund’s earnings on that sum.
And to date the Fund has generated less money, than if it had been in risk free Government bonds.
Roughan also has a go at tax cuts, saying it is unfair to cut taxes in a deficit. He forgets (or omits) that you can also cut spending to reduce the deficit, and longer term a low tax eonomy will have better economic growth than a higher tax one.
The problem is not the rate of tax. It is that NZ is not producing enough income to generate that tax. And you won’t generate more income by increasing tax rates. You’ll destroy it.
Related posts:
- Absolute hypocrisy from Labour over NZ Super Fund
- Editorials on Super Fund
- The NZ Super Fund
- More on Super Fund
February 28th, 2009 at 11:29 am
A friend of my granny related her experience during the collapse of the money supply in the Ukraine. She said that people grew fearful of putting any money in banks or giving it to government.
They realised that money given to government or banks owned by government was never in reality ever going to come back to them. So they kept their money at home. Cash hidden in mattresses and in tin boxes under floor boards.
The government understood what was going on, and starved of money themselves they needed to come up with a way to get the money that was being hoarded by the people. How to persuade people to get that money out of the hiding places and give it to government?
So they printed new currency, and declared the old currency null and void. People were forced to go to banks and give their real money in exchange for the “new money”. At an exchange rate that made the new money worthless. The Ukrainian people were left destitute.
Moral- when there’s no money, there’s no money.
Pity so many have to learn that simple fact the hard way.
Vote:February 28th, 2009 at 11:38 am
This is exactly why I’ve never liked Goff. He’s always been a propaganda freak. He always tells people what he thinks they might be receptive to and what is in HIS/Liarbore’s own best interests.
All politicians do this sometimes and all politicians are always acutely conscious of this dynamic and leap on it at every opportunity.
However, good politicians don’t do this when it’s in the nation’s best interests not to hear that angle.
Goff however has never ever done anything but this.
Proving to me that he’s not only an idiot (because if you don’t do this when it’s not appropriate, people recognise and respect that), he’s also an arsehole.
Vote:February 28th, 2009 at 12:51 pm
Actually, I think perhaps some of us continue to contribute to personal super or saving plans even though (a) times are a bit tough; and (b) better returns may be found by suspending elsewhere at the moment. It may not be fiscally logical, but we know that on, a long term basis, it’s better to assume that if we stop providing for it and/or start to dip into the piggy bank, it’s impossible to stop. It’s about habit on a long-term basis.
Vote:February 28th, 2009 at 2:41 pm
Dean – that is a pathetic comment and if you weren’t so automatically pro-Labour I think you’d know it.
Yes, people may keep contributing to a personal savings plan when things are a bit tough and better short-term returns may be available elsewhere. But that is not the analogy with the Super Fund situation.
The analogy with a household is not one where the household is finding things “a bit tough” but where that household knows that it will be spending more than it earns every year for the next 15 years and will therefore have to increase its mortgage every year for the next 15 years.
For any such household there would be no question at all that contributions to a savings plan should be suspended.
I would have thought that you would also know that deciding not to borrow to put money into a piggy bank is not the same thing as “dipping into the piggy bank”. The proposal that the govt seems to be considering is leaving all the money that is currently in the piggy bank in that piggy bank but not borrowing to put any more in until a surplus returns.
Sorry to say it, but no one but a kneejerk Labour loyalist / National-hater or the mentally retarded could possibly not support the govt on that.
Vote:February 28th, 2009 at 2:43 pm
“Geoff smelling fear”, pigs arse, this socialist bastard wouldn’t know what fear was. But I know how to make him afraid. Lets cut the parliamentary super scheme down to the level of the common peasant, then you would see fear, real fear.
Vote:February 28th, 2009 at 5:18 pm
Right now is exactly the time that you spend money on the stock exchange. Shares will never be cheaper. Unless the whole economy goes to hell in a handbasket in which case it does not matter right now is the time where if you have the ability to borrow you would so that you could invest.
I am with Goff on this. Roughan’s comments were far too simplistic. Overall the fund has performed well and you have to be in for the long run to make this sort of investment really pay.
[DPF: So are you borrowing money to invest in the sharemarket? If not, why are you forcing me to do so?]
Vote:February 28th, 2009 at 5:25 pm
‘Overall the fund has performed well ‘
And the basis of this outrageous statement Mickey Mouse is what?
Did you know that 95% of Statistics are made up on the spot?
Vote:February 28th, 2009 at 5:40 pm
Agree, you buy now on the sharemarket.
Vote:February 28th, 2009 at 5:46 pm
FTSE is 3800. It will be 2500 less after the Summer.
Have a look at the pension obligations.
Not funny.
Vote:February 28th, 2009 at 5:56 pm
“Have a look at the pension obligations. Not funny.”
Yep. Esp with the baby boomers entering retirement, and the pension funds being into hedge funds in a big way.
Vote:February 28th, 2009 at 6:18 pm
The real shock is due in about 18 months time.
My Father has a pension annuity with Canada Life.
He paid over the thick end of a Mill, and got 35KGBP as an indexed linked annuity, with spousal rights.
Where are the Life Companies going to get the returns in this low interest rate scenario, with equities burning, tax take diminishing and even the likes of Switzerland under duress.
Going to be very embarrasing when they default on their obligations.
And all the Life Companies will have to.
Vote:February 28th, 2009 at 9:56 pm
you didn’t highlight this bit..dpf..
“..(roughan is also pithy/withering in his assesment of the failures of this key/national govt..
..especially over their (continued) policies/plans to cut taxes..)
“..The measure of leaders is their capacity to do what ought to be done..
..and counter any misrepresentation of what they have to do.
This Government has yet to pass the test..”
..any comment on that..?..dpf..?
..remember..roughan is ‘one of yours’..
..eh..?
..phil(whoar.co.nz)
Vote:February 28th, 2009 at 9:59 pm
Phool
You do seem desperate to see the tax cuts canned, do you have any reason for this other than a small minded jealousy of those who work for a living and therefore earn more than you?
Vote:February 28th, 2009 at 10:11 pm
Thats settled then.
The REINZ and Tony “Pinochio” Alexander say its a great time to buy property
(please, please, tape my sides up)
MickeySavage and the substandard posse reckon its a great time to borrow in order to invest in the stockmarket during the biggest asset bubble price re-adjustment since, well, ever.
(oh FFS, gaffa tape up my abdomen before its too late)
Vote:February 28th, 2009 at 10:22 pm
roughan said..
..don’t shoot the messanger..
..oh..!..it’s you..
..never mind..
phil(whoar.co.nz)
Vote:February 28th, 2009 at 10:27 pm
yeah, what phil said only coherently and not insane like.
Vote:March 1st, 2009 at 5:30 pm
Mickey obviously doesn’t invest e.g. the 2nd biggest economy on the planet – Japan – the Nikkei index is below its 1985 value and less than a 1/4 of its 1990 value. The Japanese had a major, major bubble not unlike the one the US just had – it would not be a surprise if the Dow does not recover for 15 years.
Tell you what mikey you invest and I’ll short whatever you invest in
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