Policy, tax and savings recommendations largely positive

There are many recommendations by the Savings Working Group that should be seriously considered, according to BusinessNZ.

BusinessNZ Chief Executive Phil O’Reilly says there is not a single silver bullet to rectify New Zealand’s low wealth accumulation, but the majority of the recommendations if implemented would work together to improve the country’s wealth position overall.

“The Working Group’s recommendation for New Zealand’s policy strategy to become more consistent with the goal of business profitability would, over the medium term, help bring a major improvement in wealth outcomes,” Mr O’Reilly said.

“Continuing with policies such as an ongoing switch from income tax to consumption tax and ongoing work to gain better performance and yields from state owned assets would also help improve New Zealand’s balance sheet.

“The recommendation for a social security tax to be channelled into the NZ Superannuation Fund should however be approached with caution as it would lock us into current policy settings, reducing the flexibility to choose potentially better policy options.

“Specific recommendations on KiwiSaver are also mostly positive, including keeping it voluntary.

“Requirements for more financial education and better communication of returns and fees and other charges by all superannuation fund providers would increase trust in the KiwiSaver process and in savings agencies generally.

“There would however be concern by business if the recommendation not to allow a ‘total remuneration’ approach were implemented. This would be a restriction of the right to reward employees according to employee and business needs.”