When discussing it’s new monetary policy Labour was keen to explain why they felt a change was necessary, and why a variable Kiwisaver contribution rate should be investigated. However, to investigate such a policy it is important to ask some specific questions – this is what Gareth Kiernan did in this article (Infometrics link).
In announcing its new monetary policy proposals, Labour has shown an admirable ability to think outside the square. …. Unfortunately, there are a lot of problems with Labour’s idea and the assumptions behind it.
His list of 10 questions are:
- Should KiwiSaver be compulsory?
- Does New Zealand really have a savings problem?
- How good is Australia’s compulsory savings scheme for their economy?
- Do compulsory savings programmes actually increase savings anyway?
- What effect do compulsory and limited-access savings have on the robustness of financing decisions?
- Is New Zealand’s permanent current account deficit really a problem?
- Are our ‘high’ interest rates really caused by our rigid monetary policy framework?
- How much of our mortgage interest payments go overseas?
- Does the export sector really need a lower exchange rate?
- What about compliance costs for businesses?
His answers to these questions give a case for why the VSR may not be good policy at all. What are your thoughts?