John MacDonald: I want to like this policy, but I can't

I want to like the ACT Party’s KiwiSaver policy, but I can’t.

I’ll tell you why shortly.

But, what it wants to do, is to stop charging us tax on our KiwiSaver earnings.

It also wants to do away with the government contribution for people whose employers pay into their KiwiSaver scheme. Which, after a change by the current government, is $260-a-year maximum.

It was $520 or thereabouts. So, it’s half what it used to be. ACT wants to do away with it altogether.

And, in exchange, not tax us for the money we earn.

An example leader David Seymour gives, to demonstrate how much better off we would be, is a 20-year-old builder earning $60,000-a-year.

David Seymour says that builder would be nearly $210,000 better off by the time they turn 65 under ACT’s policy.

And, when you hear that, it’s very easy to think it all sounds about right, so why wouldn’t you?

Because I know that I would most likely be better off long-term under Seymour’s plan. Because the $260-a-year from the government doesn’t make a huge difference for me.

And not paying tax on my KiwiSaver earnings would be brilliant.

But, if I think beyond my own situation, I can see there would be plenty of people who wouldn't be better off.

A few examples: the person on a low income who doesn’t and will never have a big KiwiSaver balance. A woman who leaves the workforce to have a family and whose KiwiSaver balance suffers, as a result. And the people who, for whatever reason, don’t get into KiwiSaver until later in the piece.

They’re the people who benefit most from the government contributions.

Tell that to David Seymour, though, who is saying: “Other parties want to force your money into KiwiSaver, then tax you. ACT says it should be your choice. But, if you save for the future, we will let you get the full benefit of compounding returns instead of taxing you every step of the way.”

Which sounds great, if you’re one of those people David Seymour is talking about.

In a roundabout way, I’m one of them. I know that I would be better off under this policy. But I also know a lot of other people wouldn’t. That’s why I don’t like it.

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