Could universal KiwiSaver be used for monetary policy means, former Finance Minister Cullen asks

Careful guys - this could lead to an intelligent debate ...

Seems perfectly reasonable but requires compulsory super with no opt out, home purchases, contribution holidays and all the crap that destroys the effectiveness of our dopey scheme.

Only outs should be you die or reach the retirement age when you are forced to purchase an annuity from the crown

Great stuff....way to go Cullen....govt to control how much peasants have to save....Why can't he come up with an answer that keeps govt out of it.

The OCR is a failure because the banks dictate its use.

Go the property bubble....tax free gains to be had...100%LVR standard game in town...who gives a sh*&.

Well, depends, Alex.

They're going to be a little pissed when they discover the truth, anyway. All of a sudden, their 'dollars' aren't going to go as far as they hoped, and that's the 'dollars' which survive - most won't.

Will the kind of status quo base-line that Cullen expects, still exist?

No.

http://www.parliament.nz/en-NZ/PB/Business/QOA/f/7/5/47HansQ_20040824_00000002-2-Oil-Prices.htm

Tell you who does get it, though, is Colin James. This is what he sees, and what he says of old Labour (and the current Greens) and the out-of-their-depth Nats:

http://www.colinjames.co.nz/ODT/ODT_2012/ODT_12Dec11.htm

That's straight off the PDK songsheet. Now ask whether Kiwisaver has a prayer? Start by asking if fiat finance has a prayer.....

Yes of course that would work and I do believe there was some of that effect (dampening of consumption and inflation)  when KS was introduced. Using it the other way - to stimulate consumption - seems a bit pointless to even discuss when that hasn't been a problem for forty years and isn't our problem now. We're still going backwards - spending way more than we earn - now it's mostly in interest payments and profits to our foreign owners.

Compulsary super? How hideous, nanny state gone mad. Just severly limit welfare and have an honest tax system with regard to tax and deductions on interest (adjust for inflation) and folk will save alright. Cullen just can't help himself wanting to interfere in peoples lives.

Cullen has more foresight than most politicians and if Labour make this a key element of its next election campaign, John Key could be in for trouble

The benefits are :

It will enhance domestic savings

It will enhance domestic capital creation

It will give all of us a stake in the economy and remove the resentfulness towards the "haves" because like the Aussies we will all " have"  a stake

It will enable us to 'catch up" with Australia

It will give some substance to our weak Capital markets.

It can become a monetary policy tool

It will remove the total dependancy on the NZ Super which looks like it will be broke by the time I retire 

I'm a big promoter of Kiwisaver and envisage in future it should be about 15% (all contributions combined).  For the purpose of ensuring people fund their own retirement.  And I don't have to fund others.

I think that would also have a significant effect on the lack of capital in New Zealand and move us towards being an investing economy.

But. But. But.  One of the big risks of Kiwisaver was that it could be used for other policy purposes by our less bright politicians.  While Cullen might have a high IQ as measured, he was also in my view quite prone to coming up with approaches more associated with a twit.

Managing the contribution rate up and down to dampen or stimulate the economy is one of those ideas that can be done because it can be done.  But it's essentially very dumb.  And NZers should be saying 'hands off"

It is an immutable law of nature, that if a politician is aware of large pot of other peoples money, they will at some stage want to stick thier beak in it, or borrow it, or use it for some other purpose.  Just a fact of life, and why i have never been a fan of Kiwisaver.

http://www.youtube.com/watch?v=IbevFguT6NE

Yes it can be.

Yes it will be.

This is the Australian experience.

Tweaking KS contribution rates doesn't sound a very nimble approach to me.   A change to KiwiSaver contribution rates will need several months of lead-in time because *all* employers and payroll providers will need to actually, physically do it.   Whereas the OCR can change at the click of a mouse.

Even with compulsory KS for all employees, it won't affect the spending of self-employed, those at home bringing up kids,  those on a contribution holiday, the under 18s, the unemployed, and everyone over 65.

Last thing we need is to increase the numbers employed in the wholly discredited F.I.R.E sector.  There is no future in fiat. Instead invest your money in real products and services that will provide for your needs. As the printing presses near warp speed, even wheelbarrows full of pension payments will be no good other than for starting the actual fire. At least in the US I think the quarter has a silver content still(?)  A more reliable bank in the future may well be a seed bank.  

This has got absolutely nothing to do with helping the poor deluded suckers who've trapped themselves into KiwiSaver .....

...... it has everything to do with manipulation of you , and of your money , by the academics and the bureaucrats ...

And why not , after all , the stoopid scheme was dreamt up by the most academically trained bureaucratic politician of modern times , Sir Michael himself ...

I have always said that Kiwisaver would just become another form of taxation. I didn't trust the moneyshifters to handle my money, and I don't trust the government to manage or control Kiwisaver.

We have become a herd to be milked. However, I'm a sentient human and prefer to use my hard earned money exactly the way I want, rather than trusting these goons and their poor foresight. Aren't these the same people who used our money to bail out the BNZ, the South Canterbury Finance club, and are spending public money to put Christchurch residents back into lovely homes, whilst telling leaky Auckland homeowners that the government and councils weren't really to blame?

Their pet projects get the public $ instead of rational natural justice determining how the money is spent.

They don't know what you or I will need in our future lives, yet they want to get their greedy mitts on your resources. Keep your cash under your own control.

What if the markets tank and don't recover for a long time, like an extended Black Swan and most of the KS funds are wiped out ? The world has been to the brink before, very recently and there is no guarantee it won't happen again in some form or other...

I would rather see the Super (Cullen) Fund take on some shareholding in NZ tech development companies -say a 10% minimum holding or a similar holding to that suggested by Selwyn Pellett to prevent too many of them being predated upon before they reach maturity.

Isn't this just social engineering?  Make everyone pay into Kiwi saver (new Tax as the government wont be on the hook for future unfunded pension liabilities.)  Then the Sate decides the best way to invest on your behalf. When has the government ever been any good at picking winners?

 The problem is that under Cullens government we borrowed huge amounts of money so we could pretent to be rich, it was an illusion and still is, but  we cannot afford to keep the illusion going much longer, those at the top are trying to invent new ways to keep the theatre going a little longer.

  The problem is we have too much debt much of it in unproductive investments like housing or in agriculture which doesn't have the income anymore to sustain it, as many of the loans were lent against capital not income.

   The present governments answer is to sell off big chunks of the country, labours is to use smoke and mirrors. Both refuse to accept that times are changing, growth wont get us out of this, we need to allow the economy to correct, we need to destroy debts on which the interest payments are impoverishing us.

 We have borrowed money which we don't have productive ability to pay  back, so we let the banks bleed us to death.

Some comments I've kept over the last few years-

"The problem is that government sector spending is treated as the equal of private sector spending in the calculation of GDP in terms of sustainability.

As you rightly point out the latter is sustainable whilst the former is not.

We need a rapidly rising velocity of money not a rapidly rising stock of money - there is more than enough stock of money. A rising velocity of money represents economic growth and the opportunity to reduce the stock of money before inflation kicks in.

How is the velocity of money increased? Not by printing more money but by lowering taxes on economically productive individuals and households.

>>>>

But there is a lesson here for us too - scocialism strips people of their dignity to the point where they can no longer understand that equal purchasing power is not a right but rather it must be earned.

But for many in the UK the same socialist mindest is well ingrained - a right to equal consumption, whether it be health services, education, food, clothing housing, without reference to the market value of their own output.

>>>>>>

•  The actual crisis is that the US federal government is now borrowing 40% of what it spends each year, except there is no one able to lend it the money (and the command over real goods and services money implies), so instead the Fed has been printing money and buying US government debt, thereby stealing from everyone who has earned their money honestly.
• The real US economic crisis is that perhaps 30%-40% of its working age population is gainfully employed.  By "gainfully" I mean making products or providing services for which customers are willing to freely pay.  Once you take out the huge number of real unemployed (16%+ in the US), the ones on lifetime welfare, a large proportion of public servants, the large numbers of students (and their professors) doing degrees that are proving worthless, the proportion of the private sector ("green industry, etc") that exists solely because it is paid by the government or performing jobs mandated by the government, you are left with about 30% - 40% of working age Americans productively employed.  And everyone else lives off them.
• That is the real economic crisis (mirrored in most other Western countries) and all brought about by the corrupt depredations of government over many decades.  It was long hidden by the combination of government borrowing (consuming now what should have been productive investment for the future, and thus stolen from future retirees), an expanding working age population and, for a time, the desire of China and other Asian countries to grow their industry by providing loans to Western countries to buy the output (loans, which they now realize, will not be repaid). All of those ameliorating factors have now reversed and the grand ponzi scheme of post WWII Western governments is fully exposed.
• That is the real crisis.

Yep, Kiwisaver pales into insignificance alongside these things.

Anyway, talking about kiwisaver, my one has gone up and down like a yoyo as I have changed jobs. In my present job I'm on 2+2 but I have previously been on 4+4 with a previous employer. I put some money away in addition to this, and adjust this sum keeping the total a constant. (Adjusted by inflation each year). So Cullen and his plans will make no difference to my spending. 

Wasn't Cullen close to a meltdown prior to disappearing from view?

Electric infrastruture was built using public money (taxes) and it is now being sold, with the courts permission, to help restore the country's finances out of the red. 

Who is willing to bet that the same won't happen with retirement funds once the need arises?

Nobody does! The trick is, nobody pays no taxes!!

HGW

Strange there hasn't been a mention from the Kiwsaver proponents or, apparently, when it was introduced, for an option of the most potent yet risk free investment avenue of them all - paying off your debt.

Why shouldn't anyone with mortgage debt not have that option? It doesn't funnel vast streams of our wealth into the bloated and parasitic banking and finance sector and almost always provides a greater net ROI. If there is any serious discussion on making KS compulsary it's vital that that option, as well as self management is included. Don't hold your breath though.  

Heh, tweaking KS rates will be Far Too Attractive, and pollies won't be able to resist the Pool of OPM thus ensnared.

"They'll turn us into beggars, 'cos they're Easier to Please'.....