Bollocks – bulk of Cullen’s Folly is invested abroad – and we took $12B+ or so out of the economy

“WFF does not take money out of the economy.” never said it did – I just said it is yet another bit of bad economics – it is welfare wasting money by taking it off middle-ish wage earners and giving much of it back to the same people having pissed a load of it away paying for bureaucrats in the middle. I suppose it does take money out the economy by adding inefficiencies now I think about it.

and by the way a tax ‘surplus’ is by definition adding inefficiencies.

Your grasp of very, very, very basic economics is pretty feeble.

WFF does not take money out of the economy.

What is missed in the calculations are the costs of removal of funds from the economy. There are clear metrics out of OECD and similar that show dragging the equivalent of close to 20% of a years GDP out of the economy over several years has a significant drag on growth.

The Cullen fund was possibly as bad as WFF in terms of smacking the economy in the chops. It is fundamentally flawed.

The idea that we can have universal benefit at 67% of average wages for ever is a sick joke.

It’s the biggest problem I have with the John Key administration

Super costs are rocketing up over the mid-term. So the current working (taxpaying) generation are upping their contribution to Super now to the 40 year average level, rather than just loading the cost on the next generation of taxpayers and crippling the taxpayer. So for now, there is an excess to make up their level of contribution to that 40 year average. That excess is (well, was) the contribution to the Superfund, that then invests it rather than just hoarding it in a giant pile somewhere. Based on getting average returns, that “excess” in Super payments would have actually reversed in ~5yrs IIRC and the Fund would have started contributing back to Super payments – hence lowering the Super payment by taxpayers. Read the legislation setting it up, it’s all quite obvious.

But greedy politicians and taxpayers couldn’t see past their 2 year “give me the tax break” view and insist on paying the immediate low cost of super rather than the mid-term average. Good one.

How did Gareth Morgan’s scheme manage to lose tens of millions of dollars?

Tamati (2.06 post) said:

Anyone who was dumb enough to invest with Gareth Morgan deserves to loose money..

Krazykiwi(2.47post) responded to Tamati:

Awww, stop your caterwauling…

David Prosser (DJP6-25) riposted at 4.39:

The money wasn’t lost. A feral cat got into the vault and ate it.

Thanks guys. We now know why Morgan is so pissed off about cats. THe only thing the felines didn’t get was Morgan’s tongue.

cheers

David Prosser

Every dollar that Labour put in to the Cullen Fund was a dollar that was not available for Labour to spend.

In my view, the Fund was one of the few really good things that Cullen and the former Labour Government did.

How did Gareth Morgan’s scheme manage to lose tens of millions of dollars?

Awww, stop your caterwauling

my buddy pulled his super out and put it into a couple of rentals..

If that’s such a great idea, why doesn’t the government borrow another $20-40 billion (why not $100 bn?) and put that into international, even local, markets? If that doesn’t sound too clever (my thesis) then neither does the current arrangement.

1. Providing you invest over a longer period of time, you will make gains in the long term. There may be short-term fluctuations, but in the end you can expect to make a return. Any savings scheme has to be invested, unless you want to stuff cash under your matress?

2. It could easily be changed so that self employed people would only have to contribute once over, as an employer.

3. People are welcome to save for their retirement outside Kiwisaver. People are already forced to contribute to the current scheme through higher taxes. End it – lower taxes.

4. I’m happy for people who reach a certain level of savings to have the oppurtunity to break the nest egg early, or simply be able to suspend contributing. Let’s face it, only those who are very very successful will be able to retire at fifty comfortably. And who would want to spend almost half their life “retired”

5. Anyone who was dumb enough to invest with Gareth Morgan deserves to loose money. But I’d support stricter controlls on managers fees and opening up competition for the Kiwisaver providers. —Something like what’s my number website?

The average cost of borrowing has been (by historical standards) very low for the the last ten years. So it’s not surprising that the delta isn’t huge. The real test will be over a 20+ year timeline.

It’s also hard to look past the benefits of better capitalisation in our local capital markets.

1. You’re not guaranteed to get what you put in, out at the end – you are at the whims of the sharemarket and current global climate.
2. There are several hundred thousand contractors in NZ, who all would be required to put in their employer contributions as well as the employee contributions.
3. There are loads of people who are successfully managing their own retirement – forcing them to contribute to KiwiSaver is wrong.
4. You are locked in until you are 65 with KiwiSaver – what if you want to retire when you are 50?
5. Its a complete waste of money, and the only reason it ever looks good is because the government and employers are putting in money to top it up. How did Gareth Morgan’s scheme manage to lose tens of millions of dollars?

It would be far better to means test super annuation, so that any actual net income generated by assets, companies or trusts a person has is taken into counted as income – that would cut a big chunk off of the Super Annuation bill each year and be fair.

surely under the treaty it belongs to maori anyway…