Is it time to talk about the future of New Zealand’s nest egg?
Before he left parliament, Trevor Mallard lobbed in an idea about using Kiwisaver to control inflation. As the nation’s savings near the $100b mark, others have a few ideas about its future too
Mōrena and welcome to The Bulletin for Tuesday, October 25, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.
In today’s edition: Rishi Sunak new UK prime minister; health system wait list fixes to be announced this week; no word from government on Christchurch’s defiance over housing densification; but first, a retired MP and his calls for an upscaling of Kiwisaver
Trevor Mallard uses valedictory speech to call for a significant upscaling of Kiwisaver
Mallard’s left-field suggestion on Kiwisaver
Following the response to the government’s attempt to add GST to Kiwisaver fund fees, further tinkering with Kiwisaver could possibly only come from a retiring politician. Trevor Mallard delivered his valedictory speech last week and presented a self-described “left-field suggestion” as a parting gift. Mallard pitched Kiwisaver as an alternative to using the OCR to control inflation. Stuff’s Rob Stock outlines the idea. It's not new and boils down to a mandatory increase to Kiwisaver contributions to slow the economy and a decrease to stimulate it. Stock writes that it’s prompting both nervous and disbelieving laughter from those he spoke to.
Time to significantly upscale Kiwisaver?
That idea of Mallard’s got the most scrutiny but he also said it was time to significantly upscale Kiwisaver. He called for the reversal of the opt-out bonus, compulsory Kiwisaver for all new entrants to the workforce, a flat employer contribution and an increase to the individual contribution rate. He didn’t mention the issue of New Zealand children born to citizens of the United States. A law change is being called for to deal with taxation red tape that’s costing some people $2000 to deal with.
Kiwisaver a cause for long-term economic optimism
Kiwisaver turned 15 in July. Liam Dann’s latest column (paywalled) reminded me it's also been 35 years since the 1987 stock market crash. Dann is of the view that we’ll see a market meltdown in the next few months. If you don’t need your Kiwisaver for a while, you can ride it out, but it’s concerning for anyone close to retirement or trying to buy a first home using their Kiwisaver. It’s not much consolation at the moment but Sam Stubbs, founder of Kiwisaver scheme Simplicity, strikes an optimistic tone about the economy, citing Kiwisaver as one of the reasons. “KiwiSaver isn’t a tidal wave of capital, it’s a rising tide…long term, Kiwis will be saving and investing hundreds of billions of dollars, taking us from a capital-starved economy to a capital-rich one.”
Bigger role for Kiwisaver in investing in local business
When we talk about rising interest rates, we often focus on homeowners but a lot of small businesses have their business lending secured by a residential property. As the Herald’s Carmel Hall reports (paywalled), about $2.2b of business loans secured by residential mortgages are due to be re-fixed within the next year. Fisher Funds’ David McLeish thinks Kiwisaver has a bigger role to play in investing in local business. You can get the gist of his thinking here (also listen via the Herald’s Continuous Disclosure podcast) or read his paywalled opinion piece here about the unrealised potential of Kiwisaver.
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Rishi Sunak, a new UK prime minister of many firsts
Boris Johnson dropped out of the running and Penny Mordaunt failed to get enough MPs to back her. Sunak was the last man standing and will therefore become the next prime minister of the United Kingdom. Full report from The Guardian here. Sunak is the first prime minister of colour, first of Indian descent and the first Hindu to hold the office. He is also the first PM that may be wealthier than the royal family and possibly the first prime minister who wanted to be a Jedi knight when he grew up. Sunak warned Conservative MPs that they needed to unite or die in his first speech as party leader. Do or do not, there is no try. The UK papers are straight in with the laundry list of problems he faces as the Daily Mirror warns Britons of Austerity 2.0. Oh and in case you were wondering, Theresa May ruled herself out of contention a few days ago and, as Wokingham Today reported, is keeping busy opening new chocolate shops.
A “blueprint of improvement” for health system wait times
1News reports that we’ll get a big announcement from Te Whatu Ora Health NZ this week on plans to fix wait times in the health system. The new health agency convened a task force in May to look at wait times. Nearly 36,000 people have been waiting more than four months for specialist appointments and another 27,000 are waiting for treatment. Health minister Andrew Little says people can expect a “blueprint” for improvements. “Those who have been waiting certainly longer than four months will get their procedures and get them in a more timely way,” he said.
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No word from government on Christchurch’s defiance
BusinessDesk’s Oliver Lewis reports (paywalled) that the Christchurch city council is yet to hear from the government after it defied a law enabling greater housing intensification. The council voted to not introduce new housing intensification standards in mid September. Former mayor Lianne Dalziel wrote to environment minister David Parker on September 20, asking that the government work with the council on a bespoke solution. Dalziel asked for a reply by September 29. The council is still waiting for a response. At the time of the vote it was widely expected that the government would intervene, perhaps even installing a commissioner to apply the new density standards.
Click and collect
Good explainer on why dropping tax on the first $14k we earn might not be as straight forward as we think
Why Simon Wilson loves road cones (paywalled).
Changes coming to clean car rebate scheme as $33m paid out to those buying Teslas
How to move an elephant and a blue whale as the Canterbury Museum undergoes development
The latest on whether you should get a second Covid booster
Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.
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Post-mortem Monday Tuesday
If I trailered a big sports weekend on Friday, it only seems fair to bring you a few wraps. The Bounce’s Dylan Cleaver describes the Black Caps’ T20 win on Saturday night against Australia as “a T20 performance that is as close to perfection as possible”. Cleaver has a rundown on half a dozen or so notable things about the game. You get his thoughts on Finn Allen for free but the rest requires a paid sub. RNZ’s Bridget Tunnicliffe has Silver Ferns coach Dame Noeline Taurua’s thoughts on the team’s Constellation Cup loss to Australia on Sunday night. Stuff’s Paul Cully looks at the Black Ferns’ win over Scotland and then ahead to their Rugby World Cup quarter final game against Wales on Saturday. The All Blacks are another player down ahead of their game against Japan this Saturday as Leicester Fainga'anuku heads home for family reasons. That game is scheduled around the same time as the Black Ferns’ quarter final. I guess scheduling clashes are inevitable but rugby fans will have to make a choice.
The Prince
A podcast recommendation for you today. Xi Jinping has secured an historic third term as leader of China, putting him in the same realm as Mao Zedong. I listened to a few episodes of The Economist’s The Prince over the weekend while planting my red tumbler tomatoes. The episodes I’ve listened to so far detail Xi Jinping’s childhood and his time as an official in provincial Fujian where his wife Peng, a folk singer, was far more famous than he was at the time. The Economist's China correspondent Sue-Lin Wong fronts it and, as she points out, she can only do it because she’s Australian. Any Chinese journalist trying to make a podcast like this would be risking imprisonment
