National pledges to allow those who lose their jobs in the wake of Covid-19 to access up to $20,000 of their KiwiSaver funds to start a business 

National pledges to allow those who lose their jobs in the wake of Covid-19 to access up to $20,000 of their KiwiSaver funds to start a business 
Judith Collins

National is campaigning on giving people who have lost their jobs since March 1, 2020, the opportunity to access up to $20,000 of their KiwiSaver funds to start a business.

Under its new “BusinessStart” programme, it’s pledging to give the unemployed a $1000 voucher to get advice from an accountant or financial adviser to develop a business plan.

The Ministry of Business, Innovation and Employment would then assess the proposal, and enable the business owner to access up to $20,000 from their KiwiSaver to invest in the business. Current KiwiSaver rules only provide for withdrawals at retirement, for a first home, or if one is under financial hardship.

From this point, National would enable the business owner to access at least $10,000 in tax credits to pay GST or provisional tax when the business starts making a profit.

It would also waive the $130 Companies Office registration fee and give the business owner access to free mentoring from “advisers like chambers of commerce, employers and manufacturers associations and Business Mentors New Zealand” from a new $10 million fund it would set up.

National Leader Judith Collins said: “No Government ever creates jobs. You, the business owners and entrepreneurs of New Zealand, do that. National wants there to be more of you. National wants to back you, as you back yourselves and your mates to get this country working again.”

BusinessStart would begin on November 1, 2020 and run for through to March 31, 2022.

Collins said BusinessStart was even “bolder” than National’s other policy aimed at helping businesses - JobStart.

Under JobStart, announced on May 29, National would pay businesses $10,000 for every new fulltime employee they hire.

The payment would be capped at $100,000, or 10 new employees, per business.

While the scheme was initially proposed to run between November 1, 2020 and March 31, 2021, Collins said National would extend it to March 31, 2022 to align with BusinessStart.

Furthermore, she said National would increase the provisional tax threshold from $2,500 to $25,000, and lift the threshold to write off old assets from $2000 to $5000.

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96 Comments

Sadly that a significant part of NZ's economy has been built on serving others from abroad.

No international students
No overseas workers
No international tourists

NOOOOOO Businesses!

"NOOOOO Businesses".....in those sectors, bot boy.

I've long disliked these areas of the NZ economy due to their propensity to external shocks - like the China virus we've got now (and it's not the first one that's killed large numbers of people, too) . But it usually always takes a crisis before human beings do anything.

But we have a robust primary produce sector, manufacturing and IT. The latter one (IT) has also been the fastest growing sector. Long may that continue!

Collins is arching her eyebrow so it must be a joke. How quickly she's become a figure of fun.

Affiliated Financial Advisors and Kiwisaver providers won't be happy with Collins Call. It will effect their incomes.

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Well to be fair, many voted for National when they bribed people with their own money in allowing access to kiwi saver for a house purchase. So probably some people are stupid enough to take the bait.

You mean like Labour using everyone's TAX money to pay for first year at Uni ?
Only an idiot would do it that way. Paying the last year would have at least wiped out those that don't actually go to finish.
Not saying National is perfect but at least your using your own money and not wasting everyone elses !

Agree on the last year of Uni. Not sure why the Nats haven't colonised that, seeing as there's policy pilfering across both National & Labour in the ongoing battle for NZ's centrist political nature.

Yep but if you want to BUY votes you just throw tax money at it like Labour.
Just ignore that it has to be paid by someone !

Compared to disguising tax cuts for some people as tax cuts for all? I’m taking about National and their GST change

Like the universal basic income for old people (that National supports), or property investor yield subsidy (Accommodation Supplement, that National was also campaigning last time around on increasing), the company wage bill subsidy (likewise). The biggest pretense is that of pretenders to free market capitalism who always seem to be there with their own hands out.

I would suggest we simply make all university graduates pay the same amount for their degrees, no matter when they did them. If they did a free doctorate thirty years ago, just deduct the cost at today's education pricing off their pension (or taxes, a la student loans).

National didn't do that because they don't want to have any broad payment for university like that.

IMO the better policy is 3rd year of an undergraduate degree free, and for student loan repayments drop the repayment rate to 6% with the government matching 6% (a la Kiwisaver) for income earned up to the average wage (~$51k). That acts like a 6% tax cut for everyone with a student loan, which is a hell of a lot of people, and since the government discounts a large amount of student loan debt (because it's interest free and eroded by inflation) it wouldn't actually cost as much money for accounting purposes as it appears to.

Totally agree on the last year of uni vs first year. But that's not my point.

The plan is to introduce free tertiary education and the first year was a step in that direction. The overall goal is good. By your logic we shouldn’t offer free education at any level. Why should my taxes pay to educate other people’s kids?

Indeed. And by the same logic we should rid ourselves of the evil socialism that is the universal pension, and those decrying evil socialism should be the first to step up.

But they won't, of course.

Well to be fair, many voted for National when they bribed people with their own money in allowing access to kiwi saver for a house purchase.

Access to Kiwisaver for a house deposit has been there since the beginning, National didn't add that. The $3,000 increasing to $5,000 deposit subsidy for buying a first home was also present from the beginning.

What National did do however is rename the scheme to HomeStart, change eligibility a bit then if you're buying a newly built property the grant is doubled to $6k-$10k per adult.

Feeding taxpayer money into demand, subsidising property investors. Bloody "socialists".

Devil is in the detail, but in principle this sounds good to me. My understanding is that in Australia you can use your superannuation savings to buy all sorts, including businesses and land. I'd support something like that here, but we can't even split our KiwiSaver across multiple providers yet as far as I know.

Step 1 : Take a subsidy scheme that already exists under WINZ and tweak it so the user pays out of their retirement fund
Step 2 : ????
Step 3 : Profit.

Hey cool, if people can turn $20k from their Kiwisaver into a profitable business then they're probably set up for life.

I started a business with $15k during the GFC. I had the benefit of my expertise and client contacts. It is possible but some businesses can't be started for so little.

A lot of businesses start during recessions, due to people losing jobs. I applaud anyone trying to start a business and provide for themselves and family as well as being a productive member of society. This should be encouraged.

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Or, as Judith Collins suggested, use it to "even to buy a ute or something; something to get your business going."

So, just spend it. We won't question it.

Spending $20k at Skycity is a decent plan.

So, just spend it. We won't question it.

This is really the intended goal. Get the people spending again. But if people are having to withdraw $20K from KS, that is likely to mean that they curently don't have access to $20K. There is no rainy day fund.

Yea, I agree 100%.

I would be all for a policy that actually stimulated small business activity, backed by KiwiSaver equity. That way the capital would actually have to be scrutinised for an ROI. But a blanket 'here it is, now spend it' is utter madness.

But a blanket 'here it is, now spend it' is utter madness.

Helicopter money would be better if she wants to stimulate spending. However, $20K cheques would be too outrageous for the establishment (but not necessarily impossible).

Heli money could work.
But if she really wanted to stimulate spending, she could always just forgive student loans.
That would be the most effective way to juice consumption.

I'm a bit biased due to having a student loan but I agree. ~200$ each fortnight I automatically put towards paying it off. I'd probably spend the extra if student loans were forgiven.

Crazy notion, huh.
Instead of subsidising zombie business, why don't we instead stimulate demand from the most productive cohort of the labour market.

Imagine the outrage if that happened, though.

Exactly. An even crazier notion would be that it could stimulate productive businesses

She might as well just come clean, bring out the revamped "Dancing Cossacks" advertisement while claiming superannuation schemes are communism. Once elected, National can disestablish Kiwisaver and refund employee contributions directly to the employee and employer contributions to the employers.

The Muldoon Government did something similar, they destroyed Labours superannuation scheme by Norman Kirk, did little in return, with Kiwisaver I suspect they will destroy that as well. Kiwis forget the past. Keep this present national out for now.

She could, but she might need to run it past Cameron first.

Yeah...I have a few friends in business banking. Their opinion? "Terrible idea, just asking for that money to disappear and leave them with far less for their retirement."

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I can see the $20k, ostensibly to start a business, being used for all sorts of things other than starting a business. Not impressed.

I can see the $20k, ostensibly to start a business, being used for all sorts of things other than starting a business.

Bitcoin? What if it mooned? She would probably try to take all the credit.

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This is the first time in 3 years I've heard National talk about having any policies at all.

Don't forget The Road! $1.5 billion!

Oh man, a road, we've never had those before. National missed the purpose for having the road.

Really? Adjusting tax brackets for inflation, roads roads roads and unwinding the Auckland regional fuel tax? There's been a bevvy of announcements over the last two years.

Missed two of those so they weren't really putting the message out there. Bridges wasn't great at telling anyone what the party is about.

Frankly I'm amazed they weren't able to construct a coherent message around adjusting tax brackets for inflation. Robertson ruled it out and there's no moral case for penalising people for their wages keeping pace with living costs.

When issuing a press release to the media they need to back it up. I've become pretty numb to the manufactured dramas that the media are obsessed with. Recently I've stopped clicking on specific articles on mainstream sites. They don't deserve traffic for rubbish.

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Given that the average kiwisaver balance was $17,130 as @ 2019,that would leave a lot of people with zero balance,but I guess we kick the can down the road and worry about that later.
On the Hosks show this morning,Aunty Jude said it was easy to start a business,it could be used to buy a ute.
At the end of this there will be a whole lot of people without retirement savings and a broken down 30yo Hilux ute to show for their labours...how many small businesses fail every year even during the good years.
It would probably be better to extend the wage subsidy using any government money used in this scheme,at least they are employed by a relatively viable business.

You want unemployed people to give their own hard earned money to a business, just so the busines can hire them and give the money back to them?
That sounds like slavery LOL

Fair play James,I worded that wrong,I didn't mean they give their kiwisaver to an employer,I mean't the money being spent on this scheme by the government.My previous post amended,I don't agree with slavery lol...

KiwiSaver ceased to be a retirement savings fund when a previous National government allowed withdrawals to buy a first home. Allowing a $20,000 withdrawal to buy a ute is a logical extension. Even more logical would be to allow withdrawal to invest in that quintessential Mum'n'Dad enterprise: landlording. Let's stop pretending, and abolish the $521.43 annual subsidy from taxpayers, which is unfair to all those who cannot afford to deposit the $1043 required to qualify for it.

Withdrawing to buy a home has been possible since the very beginning.

http://www.legislation.govt.nz/act/public/2006/0040/151.0/DLM379487.html rule 8

Much like Southern Cross was originally formed by doctors for doctors (people can afford to spend more on private operations, so they can make more money), this was clearly an idea of taking money intended for retirement and feeding it into demand to boost the housing market. Short termism for the benefit of portfolios.

Yeah, she doesnt have to worry about that... shes be 6ft under by the time the 20/30 somethings are wondering why they are living on bread and dripping in their late 60s

Yes small businesses can fail, so can b...y big ones. Employees can lose their jobs and are largely expendable to the sustainability of the employer's bottom line.
Life itself doesn't guarantee security and success. One participates in gaining their own security and success.

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It's obvious that National have no clue regarding retirement savings. The first 10 years of personal superannuation are the most critical as they will provide the vast majority of the final amount after 40 years of saving. It is not something that can be plundered now and then but it has to be left alone so that the benefit of compound interest can be left to work it's magic.

Exactly. National would be better off directing banks to underwrite GDP qualifying business rather than residential property speculation for the already wealthy.

Personally, I wouldn't be relying on Kiwisaver to fund my retirement . My opinion is make good financial decisions during your most productive years and any extra you've got in kiwisaver will help supplement retirement.

And if those financial decisions don't pan out and under National you've used kiwi saver on a house and a business then you're screwed aye.

Most businesses fail within the first year. Usually due to poor market research. If I had a dollar for every failed high end boutique furniture/antique shop in NZ, I'd be a rich man. I understand people have things they love or are passionate about but they just don't often make good business sense, which is dangerous as it often clouds judgement when the going gets tough.

If you leave your Kiwisaver funds in, you're still dependent on someone else's decisions - the fund manager you invest in. Many would prefer to control their own destiny.

Unsure how the logic works here.

After all, when you're investing in the sharemarket you are investing in other businesses.

When you're investing in your own business you're still investing in a business... those $$ put into your own business also compound over time...

When you're investing in the sharemarket you're investing in businesses that have already been successful enough to become listed companies.

Big difference.

You're investing in thousands of businesses in the sharemarket, that is you are diversified if one or several fall over... not so much with your single business and are more likely to make reckless decisions based on emotion rather than business nous.

Looks like The Economy Experts™ can only make a Rockstar Economy™ by pouring more free money at the status quo...
Oh wait, her eyebrows are up! This was just a joke!

We now have coverage to allow us to know when she is joking.
https://thespinoff.co.nz/politics/28-07-2020/eyebrow-comedy-all-the-time...

Not bad:

'Obviously, they were always going to support Gerry'

Rule number one for endearing yourself to an audience is a bit of self-deprecation, and this witticism deserved the full five millimetres of eyebrow travel it achieved.

I like this for a couple of reasons.

1st, business formation has been declining over the past few years - some commentators have linked this to high housing and living costs.

2nd, this provides private-public stimulus as both personal and government funds are 'released' into the economy. Any stimulus that doesn't 100% result in a higher tax bill down the line is probably a good idea.

3rd, higher business formation combined with directly targeting unemployment (with $10k per employee hired subsidy) is a better method to alleviate unemployment than simply 'spending money'

I'm in favour of this purely because Kiwisaver providers are already squealing about it

I was a worker on a scheme like this in the late eighties - there was a 3 month trial back then as well. Half the wages were paid by social welfare dept. to the employer. After three months the employer invariably let the worker go, only to get funding again for the next worker. It seems nice, but in effect acts just like a rort.

I might start up a ute selling business...

I laughed second time today. Thank you.

This National policy is basically a "Let them eat cake idea", Though in this case it's a; "As long as they've already paid for it using their hard earned savings".

Goes to show that National are really having to reach down the back of the sofa for ideas, since it's not in their nature to actually help NZ citizens or grow legitimate businesses.

Instead of allowing 5 useless idiots to hamper their retirement by burning 20K each. Why not give one talented person a 100k interest-free loan to convert a real unique original business idea into a real business that could possibly employ people in the not too distant future. Preferably that business would have some export potential so it does not just soak up and reallocate existing spending from within the NZ market. Which ultimately just leads to some other business going down and their owners and employees looking for work.

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This is a terrible idea. The primary reason for small businesses failing is undercapitalization. And here we have a policy which is encouraging someone who is unemployed to start a business using $20,000 from their retirement savings. A recipe for disaster.

KiwiSaver was intended as a retirement savings scheme. We already have a problem, that even with KiwiSaver, a large proportion of Kiwis will not have enough money to retire on. Encouraging them to withdraw even more from their KiwiSaver accounts will only exacerbate the problem.

Disclaimer: I am an Authorized Financial Adviser and Director of National Capital, a KiwiSaver advisory firm. A copy of my disclosure statement is available free of charge and on request.

Where to from here then if the majority won't have enough for retirement? What options do we have?

You basically have to change housing from being about the portfolio values of investors to recognising their importance in wider society. Address housing affordability as was done for the boomers and earlier generations. Continuing to simply inflate housing costs for the benefit of the few is only pulling that needed retirement money from the future into the spendthrift present - living beyond our means.

So more borrowing from the Future...

This smells of desperation.

But the joke quote of the day is upthread:
"why don't we instead stimulate demand from the most productive cohort of the labour market."

I'm going out to press the accelerator on my car. If nothing happens I'll press it harder.

Wow, another ridiculous policy announcement.

A high % of small businesses in NZ fail at the best of times, not to mention businesses set up by probably inexperienced and ill informed individuals during a world wide recession...!!!

I kind of like the idea. Promoting entrepreneurialism and self-reliance.

I'm a labour supporter and I like this idea. When I started my business getting money from the bank without a house was a NIGHTMARE. Yes it's a risk but the rewards are high. Still won't vote National however...

When Muldoon killed off the Compulsory Superannuation Scheme he ran a sensational scare campaign

In the run up to the election he screamed that money was flowing into the scheme too fast, before long it would own the entire Stock Exchange and then start buying up land and buildings. Within 10 years it would own New Zealand. The fools believed and voted National. Muldoon unwound the scheme. Ten years later in 1985 Australia started its own compulsory scheme. Today it amounts to nearly AUD $3 Trillion and owns under half the ASX. 50% is in Self Managed Superannuation Funds owning investment properties and pet personal share portfolios plus private businesses. NZ Kiwisaver is NZD $50 billion. Pocket fluff compared to the $100 billion being thrown around. If Kiwisaver was run down or dismantled future generations will look back and hold Collins the next vandal

Aussie's have been pillaging their super recently though

The other version of this would be for KiwiSavers to be allowed (or encouraged) to invest in very small start-ups. This would require the scheme managers, the scheme contributors and government to work closely to ensure that the risk and rewards are clearly understood and shared (e.g. government can play a role by offering a loss limiting protection etc, so the risks are less and rewards more attractive)

The provisional tax threshold is already $5,000. Seems National aren't on top of the details of the things they're wanting to change. https://www.ird.govt.nz/covid-19/business-and-organisations/provisional-tax

The New Zealand Government has recently passed legislation to increase the provisional tax threshold from $2,500 to $5,000.

This is a permanent change that will take effect from the 2020-2021 income year. For most taxpayers, this will mean 1 April 2020.

Great initiative.
Although in principal KiwiSaver is good, it has always concerned me that apart from those specific exemptions others note, the money is locked away.
The decision to back oneself and become self employed can come at any stage of life and will normally require access to start up capital. The situation that one can't access KiwiSaver capital, I suggest could be quite an impediment to people achieving that self employed objective.
From what I've read, the greatest criticism comes from the funds management sector and that smacks strongly of self interest.
For the record I don't have a KiwiSaver account and have been self employed most of my working life

Difficulty in access is the whole point of a retirement scheme... you don't rock up to the IRD and ask for super at the tender age of 30 do you?

I fail to see the relevance of that comment. National Super has clear criteria and is not individualised or indexed to tax paid. KiwiSaver is individualised and private interests extract profit for the privelege of 'managing' individual KiwiSaver savings while shouldering very little risk.
Have you ever owned your own business?

You pay fees regardless of whether you invest inside or outside of kiwisaver. The advantage of kiwisaver is of course the employer and government contributions. If people want more liberal access to their funds they can choose not to contribute to kiwisaver and invest how they choose.

There is no guarantee about how much money will be available in 30/40 years time, for the young. Plenty of examples offshore where company pension plans cant meet their original obligations. If young tradies want to start up on their own buying a ute may make sense. Likewise a young sheep farmer looking to start up a crutching/ scanning business. Judith Collins shows that she is aware that not everyone needs funds for houses. ;-)

For sure there are no guarantees in life,but we have to stop corrupting Kiwisaver, I am sure most employers wouldn't want to keep contributing 3-8% of the employees salary if it can be withdrawn for so many different reasons...and why just to start a business,people will be arguing that it is just as important to be able to withdraw for all manner of personal crisis...why not to pay off your rental,apparently they are a business,why not be able to clear any manner of debt if you have lost your job? And it is disingenuous to say it is their money anyway,it is a combination of taxpayer money,employer contributions & employees money.

Yes there's a tax credit available. But to say some of it is Employer's money is disenguous in the extreme. It's the employee's income package. Don't tell me employer's don't factor in KiwiSaver contributions when calculating employee remuneration.

It is true that future bets will not all be honoured - KS among them. So it makes sense to obtain what you know you will want ahead, while the bet is cash-in-able.

But your final comment reminds me of your somewhat incorrect statement some time ago - the one I pinged. Remember? Not surprised your are in her kennel :)

An absolutely terrible idea. And yes I should know as I've been a reasonably successful small business owner for most of my life. But my first two business ventures failed.
There are inborn qualities that are required to be successful in business that you don't need when you're an employee. For instance, you don't need academic qualifications unless your business is merely a professional practice like a doctor, lawyer, surveyor, etc. But you do need an incredible drive to succeed and be good at dealing with the public and husbanding your finances; you can't expect to acquire a gold credit card and eat out at restaurants three times a week or buy a new car on first setting up in business as I have witnessed otherwise sensible people do.
Business is a long term investment of your time; it means putting your head down and scrimping and saving to pay off any loans as quickly as possible and then building up your savings. I would say you need to do this for a minimum of ten to fifteen years before you can loosen the reins a bit even assuming the business is successful.
Also you need some luck along the way. If you're successful others will notice and one or two could even set up in competition with you. You then need to deal with that. You need a dollop of shrewdness and cunning.
The best way to succeed (in the past) has been to buy an established successful business, but if you look at those types of business you're going to need more than a contribution from your Kiwi saver......your looking at $100,000 minimum, or more likely much more. But even here you need to look closely at why the vendor is selling; it could be that Covid has negatively affected the business.

Business employs worker, gets 10k. 90 trial ends, worker deemed not good enough and let go. Business employs new worker, gets 10k. 90 trial ends, worker is deemed insufficiently proficient, is let go. Repeat the cycle until Job Start deemed a failure.

andyBBrown: your scenario is not the norm; the few rare cases exposed have usually been immigrant food businesses exploiting their own kind.
In my experience you look after a good employee and hope to keep them long-term. In all my years in business I have only wanted to get rid of two employees both of whom were unteachable and seemed to not really want to perform the basics. I persevered with them, doing everything I could to assist them; in the end I had no choice but to dismiss them; in both cases I contacted their parents first and explained the situation; in both cases the parents understood my reasons and it became obvious that the employee had already been 'a worry' to their parents on account of the employees' behaviour at home. They seemed to come from good families, and I can only surmise the the young employees had unaddressed mental health problems.

In my short 60 something years on this planet , I have noticed a few things .

Firstly , [ Sexist 'joke' is just not needed here. Deleted. Ed. ]

Secondly , not all men are successful farmers , even though many would like to be , some are , many are not .

And not all people are successful in business, even though many would like to be , a few are , many are not .

For some, I suspect many , using their $70,000 in Kiwisaver to start "a business" means they fund is going to be plundered leaving them with nothing .

Its just a dumb idea

Good job getting more money for Chartered Accountants, Consultants, Financial Engineers etc in seeing this scheme through. Best to start such a firm and get money every which way.

Not going to change the fact that the great majority of new businesses fail in the first couple of years. So the cash goes from pro fund managers into the hands of someone who’s in all probability going to lose the lot. And that stat is from scenarios when the founder is ready to start it, not when hordes of them are incentivised by being laid off. 20k could be gobbled up in the first month of a 1 person startup.
What could one start quickly after being laid off, with just 20k? Lawn mowing? Coffee cart? Landscaping? Barber? Wedding Photography? They should redirect funds to higher skill training (scalable, exportable output) instead of this Keynesian hole digging and filling.

Totally agree.