Q+A: Turei - Kids’ KiwiSaver policy
Green Party announces Kids’ KiwiSaver policy
Green Party co-leader Metiria Turei told TV One’s Q+A programme that for as little as $2 per week every NZ child would have $13,000 by the time they’re 18. The policy aims to lift children out of poverty and improve NZ’s savings culture.
When asked how much this would cost she responded by saying “it’s about $60 million the first year. At full cost, once all New Zealand children are in the scheme, it’ll be around $250 million, $248 million a year.”
“It’s one-thousandth of the government’s budget. It’s an investment plan – investment in our kids for their future, but also an investment in New Zealand’s economy,” she says.
Q+A, 9-10am Sundays on TV ONE and one hour later on TV ONE plus 1. Repeated Sunday evening at 11:35pm. Streamed live at www.tvnz.co.nz
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Interviewed by Corin Dann
CORIN Joining me now is Green Party co-leader Metiria Turei. Good morning to you.
METIRIA Kia ora!
CORIN What would the Greens make their top priority? How would you help a family like that, for example?
METIRIA We, today, are announcing a policy that would go a long way towards improving the financial stability of families and also the economy through Kids’ KiwiSaver, where at birth, a child would be enrolled in KiwiSaver. Government would kick in $1000 initially and then have matching contributions for those on reasonable incomes and a top-up contribution for those on very low incomes. The point of this is to build a savings culture in New Zealand, because a strong economy has a strong savings background and a strong savings culture, as well as provide all children with a nest egg when they turn 18.
CORIN But is that a savings culture for the government or for people?
METIRIA For both.
CORIN But I mean, the government’s putting the money in, but what’s the guarantee the people will put money in?
METIRIA Well, this is why our scheme is so good, our plan is so good. For low-income families, if you make a $2 contribution every week for each of your children, your child will have something like $13,000 by the time they’re 18 to spend on education, to buy a house or to invest in their retirement scheme. If you’re on a higher income, $4 a week per child, your child will still have around $13,000. And what that means is that we have a savings culture being built around that child. We have a savings pool – a much bigger savings pool – that will benefit the economy – because we know savings in New Zealand is very low – and every child the choice and opportunities at 18 to make the best of their lives.
CORIN Sounds a little bit like compulsory savings or something.
METIRIA It’s not compulsory, because parents can opt out. But it is universal so that every child has the best chance, at 18, of taking up the opportunities they might have, whether it’s education. But they might want to save and keep that KiwiSaver for a while and buy a house when they’re 25. A child who turns 18, keeps the KiwiSaver and the adult KiwiSaver, earns a minimum wage – by the time they’re 35, that KiwiSaver will be around $100,000, which is an excellent deposit for a house.
CORIN So tell me, what is the cost for the government in setting this up?
METIRIA It’s about $60 million the first year. At full cost, once all New Zealand children are in the scheme, it’ll be around $250 million, $248 million a year. It’s one-thousandth of the government’s budget. It’s an investment plan – investment in our kids for their future, but also an investment in New Zealand’s economy.
CORIN Sure, I get all that. But the money’s got to come from somewhere. You’re talking quarter of a billion dollars when it’s fully rolled out.
METIRIA When it’s fully rolled out. Yup.
CORIN Where are the government going to find that? You know that the government’s been told it’s going to get $15 billion less over the next four years because of the current situation with inflation and the fact that it’s just not getting the tax revenue it was. How’s it going to finance that? Something else is going to have to give. That’s the thing.
METIRIA That’s right. Every government makes choices, and unfortunately this government has made very poor choices over the whole period it’s been in government. Its first real decision it made in the Budget was to give tax cuts to the wealthy, which is very problematic.
CORIN So you’d reverse those?
METIRIA Yes. And we announced that policy at the last election. We know that we can make different choices in any budget to invest in families, that is better for our economy. We’ve put those plans out at the last election, and we’ll continue to deliver on those plans from now until the next one.
CORIN Also interestingly, you’re the one party that stuck with the Capital Gains Tax.
METIRIA That’s right. It is the right thing to do. Even the Reserve Bank Governor agrees that it's the right thing to do. Government is allergic to dealing with the demand issue. But it has to be dealt with. The Reserve Bank is doing what they can with very blunt tools, and LVR is a very blunt tool. But they’re doing what they can. We need Government to come to the party and stop sitting on their hands. They need to deal with demand by a capital gains tax and restricting foreign investment in the New Zealand housing market.
CORIN Have you spoken to Labour about this, though? Because Andrew Little’s made it very clear he doesn’t think they can be re-elected – that the Left can be re-elected – with the policy of a capital gains tax.
METIRIA New Zealanders know that the Auckland housing crisis is a threat to the whole economy, that it’s simply not okay for young New Zealanders – those who are under 40 – not being able to buy a home and establish some sort of financial stability for themselves. They want to see some change. So we have to keep talking about the tools that we’ve got – Capital Gains Tax, restrictions on foreign owners, the Green Party’s Progressive Ownership policy, where Government is building homes and families can rent to own those homes over time. These are all tools we need to use.
CORIN Come back to my point. Is Andrew Little wrong that a left-wing block can’t be re-elected?
METIRIA Yes, he is. Yes, I think he is wrong. I think we need to be real about the housing crisis and say, ‘We will use every tool that we have at our disposal – both government, the Reserve Bank, industry, commercial organisations – to slow down and soften the housing crisis’ so that we don’t have families whose houses suddenly drop massively in value, but we do make sure there is more affordable housing for all New Zealanders. That is what this Kids’ KiwiSaver plan that we’re proposing today will help with over time – building a savings culture, helping to reduce the impact of a poor savings culture on our economy and making sure that kids have access to some wealth when they’re 18 to 25 so they can buy a home.
CORIN The government is likely to make hardship, alleviating severe poverty, its focus of this Budget. Once it’s got all the pre-Budget announcements out of the road – and they’re coming thick and fast. What is your hopes in that space? What would be your top priorities in that area that the government should be addressing?
METIRIA Well, I think the Kids’ KiwiSaver is an excellent example for National. It meets their investment approach in young people. It’s an excellent tool for the economy overall and shows some commitment to both low-income and all New Zealand families who are finding it really hard. Most New Zealand families are really struggling at the moment. That’s one. But then we also have Action Station, along with CPAG and UNICEF, are campaigning for a shift in Working For Families to make it fairer. This has long been our policy – that the in-work tax credit should be rolled into the family tax credit and delivered so that all families, particularly low-income families, get access to it.
CORIN But we know National’s not going to tinker with Working For Families in this Budget.
METIRIA They probably won’t, and I don’t think we’re going to see any major shift in child poverty as a result of this Budget. I think there’ll be lots of filling around the edges and moving money around but no real investment.
CORIN But what’s wrong with them taking a targeted approach? I mean, they can basically identify that there’s, you know, between 60,000 and 100,000 children in extreme poverty, and they’ve sort of burrowed down. I mean, that makes sense, doesn’t it?
METIRIA Extreme poverty comes from poor income. If you don’t deal with income, you can’t deal with the consequences of poverty properly. So they need to be taking an approach that deals with income and deals with the future stability of those families. Our tool, the Kids’ KiwiSaver, is an excellent option for them to deal with future— the future stability of these families and these kids. But they also need to address income.
CORIN So that’s quite a different approach there, because you’re saying, in the end, ‘You do need to give them the money. You do need to give them the po—’
CORIN …that sense, whereas this government is very adamant about targeted, wrap-around programmes.
METIRIA And it hasn’t worked.
CORIN Well, why do you say that?
METIRIA Well, 35,000 more children are living in poverty today than when John Key first became Prime Minister. The problem is at least stagnant, if not getting worse, for most families in this country. Half of New Zealand families haven’t seen any appreciable rise in their income under this government. So families like the one that was on—
CORIN That’s not entirely true. Wages are rising at about 2%. Inflation’s virtually 0. So actually a vast bulk of New Zealanders are getting gains.
METIRIA No. Most— More than 50% of New Zealanders, the lowest-paid New Zealanders, have seen no appreciable increase in their income—
CORIN Well, they’ve seen the minimum wage rise.
METIRIA …because growth— there has been significant growth— there has been some growth, but wages haven’t kept up. And we’ve seen with that family that you just had on how even those who are reasonably stable are still really concerned about their financial stability. And just think – that is about the average income . There is 50% of the country earning less than that. It is a real concern. More than 50%, actually, earn less than that, and they are really struggling. So if you look at the numbers and you look at the evidence of families, you can see this government has done nothing for young New Zealanders who are trying to get by.
CORIN We’ll wait and see what they come up with in the Budget. Thank you very much for your time, Metiria Turei.
METIRIA Kia ora.