The Savings Working Group should focus on empirical evidence of savings in New Zealand so we don’t end up saddled with expensive policy errors, the Business Roundtable says.
In its submission to the SWG, the business lobby group questioned whether New Zealand actually has a savings problem and took aim at policies such as KiwiSaver that have been implemented to correct this problem.
It said the SWG, which is chaired by Kerry McDonald, needs to take a “broad approach to its work because “many government policies have an effect on savings.”
Although the government has ruled out some changes this shouldn’t stop the SWG commenting broadly in the interests of public understanding, the Roundtable said in its submission.
However, it said policies such as KiwiSaver had put in place as a result of misinformation and poor analysis, and warned against repeating these expensive mistakes.
“We think there has been much mistaken analysis around savings over the past decade, especially by the Treasury, and that as a result, costly policies have been based on false premises.”
It referenced a number of studies, including the 2001 McLeod Tax Review, that suggest that New Zealanders aren’t as spendthrift as we’re made out to be.
The McLeod Review found there is little evidence that New Zealanders save too little or that changes to the tax system would result in higher savings and concluded most New Zealanders are making adequate provision for their retirement given NZ Super.
One of the major issues the SWG is looking into is whether KiwiSaver should be made compulsory, a suggestion the Business Roundtable rejects.
As well as being an “infringement of liberty”, compulsion would require constant changes to regulation and would carry the risk of an implicit government guarantee, it said.
The Roundtable also recommended that the Reserve Bank have a lower inflation target, negating much of the need for the tax system to be inflation-adjusted.
Mon, 11 Oct 2010