Tuesday, July 12, 2011

A wet week in July is a long time in politics

While Labour have caught the Nats off guard and unbalanced on the Capital Gains Tax thing, might I humbly suggest another front alongside this policy to further strengthen their hand. Nationalise KiwiSaver and fold them into the NZ Superannuation Fund.

1) KiwiSaver funds are Too Big To Fail.

Make no bones about it. When some of those piddly KiwiSaver funds fall over, what will become of the retirement investors? Sure as finance companies is eggs, the government will find a way to mitigate the damage to these government mandated retirement schemes rather than risk displeasure at the voting booths.

This is one thing the Key government has made abundantly clear. The NZ government will underwrite catastrophic failures in civic welfare. Yeah, technically the Allan Hubbard write-off was under Labour's deposit guarantee scheme from 2008. But AMI getting caught on the hop is a clearer example of the point. The Leaky Homes Bailout is a particularly seasonal example.

The NZ public believe in this KiwiSaver guarantee implicitly. Why not, y'know, admit that point and go from there. And if the KiwiSaver funds were to be individualised yet maximised, you could do much worse than the one that looks after the senior civil servants and politicians. Which segues nicely to Point the Second...

2) Why the Nats can't trump it.

Well, it's a policy that Roger Douglas could love. A nationalised superannuation account was Third Labour Government policy, the one wrecked by Muldoon all those years ago. Singapore has Temasek. NZ would have the KiwiSaver Fund. Can you really imagine Key selling nationalisation to his electorate?

3) The honey-glazed carrot stick.

Everyone's got a billion ways to spend money. Raising money is bloody hard. Crack that nut and the rest comes easy. While the public attention is mulling over a capital gains tax, why not give them a no-brainer sweetener?

No-one really understands KiwiSaver. Interest.co.nz is mining a rich vein of ignorance here. While you're up-skilling Kiwi financial literacy, why not put them at ease with their ignorance with a singular scheme run by trusted experts?

4) A coded acceptance to the public that Labour 5 wasn't perfect.

Michael Cullen might have had the best of intentions with KiwiSaver, but he really cocked up on the launch and delivery. The mechanism for KiwiSaver is a dog like Working For Families is a dog. Good intentions poorly executed. Tidy up after that incontinent mutt and give the public a new puppy to adore.

5) Revenue neutral.