Supporting New Zealand Savings a No Brainer
Rt Hon Winston Peters
New Zealand First Leader
New Zealand Association of Credit Unions Political
Thursday 28 August, 5.30pm
Waitemata Ballroom, Langham Hotel, 83 Symonds St
Supporting New Zealand Savings a No Brainer
First $10,000 interest on savings tax
New Zealand First’s KiwiFund benefits.
Let us make it clear at the outset that the New Zealand First Party:
1. Is alarmed at the level of our
Government’s and our Nation’s debt. This Government has
increased government debt six fold to now $60 billion with
forecasts to go much higher. Our nation’s debt is now $150
billion, seriously similar to Portugal and Spain.
2. Supports the role of Credit Unions and the work done by your association.
They play an important role in savings and supporting our economy.
And given that 95 per cent of the banking structure is owned by Australian banks we should be doing all we can to support local savings structures.
Any discussion of savings and financial institutions has to start with the economy.
And over the past six years, New Zealanders have been hard done by Government.
There is more uncertainty in relation to job security and making ends-meet than ever for large numbers of New Zealand families.
This is no rock star economy.
The Government keeps boasting about this so-called surplus, despite the hardship many Kiwi families are currently experiencing.
The National Government is more concerned with creatively balancing the books at the expense of Kiwi’s getting a fair go.
Unless people earn more the blunt fact is that they are unlikely to be in a position to save more.
New Zealand First has comprehensive and sound economic policies which will give all Kiwis a fair go and get some real growth in earnings.
We stand for sound policies to rapidly expand our exports and as our economy prospers the pool of savings will grow – and credit unions can play a useful role in providing savings mechanisms.
As a nation we need to save more.
National talks about encouraging savings but that is as far as it goes.
It’s just words.
New Zealand First’s Savings Plan
New Zealand First has consistently argued for more support to build a savings culture.
As you may recall we put a referendum on a savings scheme to the New Zealand public in 1997 and lost in a sea of political opposition from both National and Labour.
We may have lost then, but history has proved us right.
They might have voted us down but they most certainly didn’t vote the problem away.
Think how much stronger our economy would be today, 17 years later, if that bold New Zealand First initiative had been supported.
The scheme proposed tax cuts which would go into personalized savings accounts making the savings painless.
We lost, but we respected the public’s collective decision in that referendum.
The fact is that savers have been poorly treated.
The public can only save what is left to them after tax.
Then when they earn interest, that interest is taxed too.
In short, they are double taxed, and then if you add inflation there is a serious erosion of the real returns that people receive.
How can people save when the government’s approach is to, over time, destroy those savings.
No wonder many people give up saving as being a mugs game.
National has turned the Auckland property market into a speculators dream of heaven as more and more people put their money into property.
Property valuations on average rose 33% since 2011 – no savings scheme can match that!
A fundamental goal for New Zealand First – or any government – is putting our interests first and ensuring that we are safeguarding our future development as a nation.
The only way to do that is by protecting key infrastructure and facilitating a long-term sustainable savings base.
Our savings policy will ensure that we are protecting investors, improving regulation, and fostering public confidence in the finance industry.
New Zealand First will introduce a bold set of tax incentives to encourage private savings - the first $10,000 of interest earned would become tax free.
Plus we will not be forcing student loan holders and earnings above $19,000 12 per cent of their income, but rather the 10 per cent which the government moved from on April Fool’s Day last year.
We will introduce government guaranteed inflation proof bonds – eligible to New Zealand citizens resident in New Zealand only – that will pay the inflation rate (measured by the CPI) plus 2.5 per cent.
In addition, we see Credit Unions as having an important role to play as New Zealand based financial institutions.
In the context of encouraging saving, New Zealand First will also introduce and establish a new KiwiSaver option – KiwiFund.
KiwiFund will be government run, and offer Kiwis a savings scheme with minimal fees and a guaranteed return of capital.
KiwiFund will be able to offer minimal fees because its aim is to maximise returns to savers not just make profits for fund managers and owners.
Another reason why KiwiFund will appeal to New Zealanders is that the focus of the scheme will be to invest much more in New Zealand land, assets, enterprises and infrastructure than do existing KiwiSaver providers.
New Zealanders on the whole are patriotic. They want to see their savings serving the development of their own country when that makes sense.
A very appealing feature of KiwiFund is that it will guarantee that savers, at a minimum, will get back their capital plus inflation.
With current providers, savers carry all the risk and fund managers clip the ticket however poorly their scheme performs. This means savers may save for years but lose the bulk of their savings if a provider fails.
As KiwiFund will be open to all New Zealand citizens and permanent residents, it will compel current KiwiSaver providers to raise their game because New Zealanders will in future have an attractive State run option.
New Zealand’s real problem today is that our GDP is far too low. One third the size of Norway for example, that does not have a much larger population than New Zealand.
We’ve got to grow our wealth and savings at the same time and if we keep these objectives in mind, we might one day become a creditor nation again and whilst doing so, rapidly improve the lives of all of our citizens.
It’s common sense.