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Speaker 1: Now.

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Speaker 2: One of the big political stories over the weekend was

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Speaker 2: the New Zealand First Conference and one of the ideas

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Speaker 2: that came from that was reforms to Kiwi saver. New

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Speaker 2: Zealand First is proposing to make key we save a

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Speaker 2: compulsory raise the minimum contribution to ten percent and then

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Speaker 2: give a tax cut to offset that extra cost. Shama

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Speaker 2: Bill Yakup is the chief economist at Simplicity and with us.

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Speaker 1: Hey, Shomo, good, he how are I?

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Speaker 2: I'm well, thanks man. I was talking to Nichola Willis

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Speaker 2: just about half an hour ago. She reckons, back of

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Speaker 2: the envelope at the tax cut will cost about fifteen

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Speaker 2: billion dollars annually. Does that sound about right?

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Speaker 1: It does? And I love the idea of a compulsory

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Speaker 1: superannation scheme, but I don't love the idea of a

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Speaker 1: tax cut funded one because I don't think we can

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Speaker 1: afford it.

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Speaker 2: No, how would you even do it? If you could

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Speaker 2: do it, would you? Is it possible?

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Speaker 3: And he suggested absolutely, He suggested target ideas. Okay, but

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Speaker 3: he suggested, this is Winston right, that you target the

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Speaker 3: tax cut two people who are going to be contributing

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Speaker 3: at ten percent, which is everybody because it's compulsory.

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Speaker 1: Can you do that, well, that means every wed and

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Speaker 1: it gets a tax cut, right, and that's our biggest

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Speaker 1: source of taxes. It doesn't, It doesn't. The numbers don't work.

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Speaker 1: You can't. We can't afford those kinds of tax cuts, right,

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Speaker 1: I mean we already can't. We're already running deficeits. So

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Speaker 1: it's not to diminish the idea because the reality is

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Speaker 1: that kV server is actually really good policy. Most New

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Speaker 1: Zealanders are in a three and a half million of us.

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Speaker 1: We're contributing regularly. It's all good. But we can probably

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Speaker 1: pick and choose a little bit of how Australia does

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Speaker 1: it to move us towards the compulsion idea. And I

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Speaker 1: think therein lies the germ of the idea that Winston's

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Speaker 1: come up with that is really good, that if we

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Speaker 1: could make that employer contribution compulsory, not the employee one,

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Speaker 1: the employer one, and then increase that gradually over time,

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Speaker 1: it would have the same effect. And the reason for

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Speaker 1: that is when you increase your kvsilver contributions, essentially it's

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Speaker 1: the total cost of employing somebody, So it would it's

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Speaker 1: by and like it's worn worn by the workers anyway,

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Speaker 1: one way or the other, So it doesn't really matter.

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Speaker 1: As long as you do gradually over time, it becomes

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Speaker 1: a non issue. And that's how Australia has done it

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Speaker 1: in two steps right, And when they first started it,

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Speaker 1: they increase it gradually over time, and they're doing it

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Speaker 1: again at the moment and they're going up to twelve

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Speaker 1: and a half percent. No tax cuts in sight.

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Speaker 2: If you do it, do you have to accept that

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Speaker 2: you will be increasing the super contribution in lieu of

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Speaker 2: pay rise.

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Speaker 1: Absolutely, that is exactly how it works in Australia. So

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Speaker 1: the incidents, what we talk about as an economist, is

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Speaker 1: the incidents who bears the cost of that increase in contribution?

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Speaker 1: By and large, it's borne by the workers, because from

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Speaker 1: our employer's perspective, essentially the cost of employing you is

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Speaker 1: the cost of employing you. Whether they're paid into your

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Speaker 1: bank account or into your accuse of account is much

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Speaker 1: the same.

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Speaker 2: Does it do anything? Will it actually create wage inflation?

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Speaker 2: Will it make us a higher wage country?

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Speaker 3: Not?

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Speaker 1: Really, that's not really how increase wages. Like, if you

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Speaker 1: want to have increased wages, we just need to have

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Speaker 1: businesses that are far more efficient and far more profitable,

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Speaker 1: and some of that will be shared with workers, and

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Speaker 1: that's having workers who are well trained, business places and

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Speaker 1: workplaces that are efficient and all those other bits and pieces.

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Speaker 1: So no easy wins. You can't enforce high wage increases

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Speaker 1: that are sustainable.

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Speaker 2: And it's ten percent what we should be roughly aiming at.

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Speaker 1: Roughly, I mean Australia's gone for twelve and a half,

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Speaker 1: so that's probably the benchmark. That's probably where you get

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Speaker 1: about forty to fifty percent of qwis that will have

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Speaker 1: enough savings in retirement to not need New Zeon Super.

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Speaker 1: They'll be independent, now, Shamu.

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Speaker 2: When Nikola Willis was talking about it, she was talking

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Speaker 2: about it as in some way replacing, Like she said,

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Speaker 2: because we have got the pension, you can't have the

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Speaker 2: pair of them. You have to take one away for

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Speaker 2: the other. Would you advocate that? Would you say, yet

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Speaker 2: you phase out the pension, go for the super instead

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Speaker 2: over time?

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Speaker 1: So over time so because with the QUI server, if

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Speaker 1: it's high enough that you'll save enough by retirement, then

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Speaker 1: you can start to pull back on New Zealand Super

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Speaker 1: as being means tested, But not until you have a

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Speaker 1: qserver system that's actually giving people enough money to retire comfortably.

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Speaker 1: At the moment, it's not enough. So our contribution rates

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Speaker 1: are still far too low to let people retire comfortably.

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Speaker 1: So I don't think we can even continance reforming new

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Speaker 1: ze On super until we have made KII sever much stronger.

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Speaker 2: Yes, stick heads away probably. Hey, thank you very much,

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Speaker 2: Shamo appreciate it. Schamovil Yakap Simplicity, chief economist.

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