The proposal advanced by the Institute for Democratic and Economic Analysis (IDEA) for a Kids Kiwisaver scheme raises interesting questions.

Under IDEA's plan, which is effectively a compulsory savings scheme by stealth, every child would be automatically enrolled in Kiwisaver at birth. There would be a government kick-start to each new Kiwisaver account and thereafter a government matching of small annual contributions by low- and middle-income families to a child's account.

IDEA estimates that the overall cost to the government would not be high, and that by the age of eighteen, each child so enrolled would have about $10-20,000 in their Kids Kiwisaver account, which could then be converted into a full adult Kiwisaver account. Along the way, IDEA hopes that those young people will have developed a strong savings habit to see them through the balance of their working lives.

When Kiwisaver was established in 2007 its purposes were two-fold. The first was to provide a long-term savings vehicle for New Zealanders to boost their retirement savings and lessen their reliance on National Superannuation after the age of 65. The second was to boost New Zealand's poor national savings record by effectively locking up access to Kiwisaver funds until the age of 65, so that invested Kiwisaver funds could be utilised for infrastructure development.

A limited exception was subsequently introduced to allow access to a portion of one's Kiwisaver funds for purchasing a first home. Over the years there have been calls to allow access to Kiwisaver funds - such as repaying student loans or meeting health costs - but governments have so far sensibly resisted these. Kiwisaver’s strength – both from a personal and a national perspective – is that funds are locked in until the saver turns 65, providing a measure of certainty for the future.

For the IDEA plan to succeed, it will be important to ensure that this aspect is preserved across the board and that young savers will not be able to withdraw their funds at age 18. Some may argue that 18-year-olds ought to be able to access funds saved through Kids Kiwisaver to pay for their tertiary education. However, that misses the point of what a long-term savings scheme should be all about. Any compromise on this point simply diminishes the value of a long-term retirement savings scheme and is contrary to Kiwisaver’s founding principles.

In any case, savings by parents, through whatever form, to meet their children’s future educational costs, while laudable, are a personal choice, reflective of their circumstances, and should not something the government becomes involved in supporting through matching contributions.

When Kiwisaver was introduced, it was a voluntary contributory scheme. It quickly proved more popular than originally anticipated, raising the question of whether it should be converted to a compulsory national scheme. However, successive governments have demurred on this point, perhaps mindful of the result of the 1997 referendum on a proposed Compulsory Retirement Savings Scheme when 91.8% of voters rejected the idea, although this result is generally thought to have been influenced by a negative reaction to New Zealand First which had promoted the referendum.

Nevertheless, the reluctance to apply overt compulsion notwithstanding, Kiwisaver has since its introduction in 2007 automatically enrolled new employees, who have up to 56 days to opt out of Kiwisaver if they wish. So, the scheme has become a de facto compulsory savings scheme.

However, IDEA’s plan for a Kids Kiwisaver scheme enrolling every child at birth raises again the question of whether the government should grasp the nettle and remove the current opt-out provisions altogether. As it stands, it is estimated that 96% of the workforce are currently in Kiwisaver, so removing the opt-out provisions is hardly likely to be controversial and would be simple to do legislatively.

So far, there have been no signs of any moves to make Kiwisaver compulsory. While some political parties’ policies favour compulsory Kiwisaver, the issue is not a priority for the current government. Nor was it for its predecessor. Both governing blocs seem content to let the sleeping dog of compulsion lie, figuring that 96% voluntary membership of Kiwisaver makes the final step to compulsion unnecessary.

Similarly, there has so far been little political reaction to the IDEA plan, suggesting that the parties are not persuaded that a separate Kids Kiwisaver scheme is necessary. After all, there is nothing to stop parents opening Kiwisaver accounts for their children now, although there is no government incentive to do so. But the current arrangement is skewed towards better off families that can afford to make regular savings contributions for their children, a point IDEA’s plan seeks to rebalance through its proposed government matching contributions to low- and middle-income households. However, whether those families will be in a financial position to make meaningful contributions is doubtful.

There is also the question of whether better-off families would use the Kids Kiwisaver plan to shelter income and thereby reduce their tax liability, raising tax avoidance issues, sure to attract the attention of Inland Revenue.

Nevertheless, the IDEA Kids Kiwisaver plan is a useful contribution to the ongoing wider debate about promoting a better savings culture in New Zealand and long-term retirement planning generally.  

Yes Minister’s Sir Humphrey Appleby once advised his Minister that “nothing must be done for the first time” because “doing the ‘right thing’ once could create a dangerous precedent, obligating one to do it again.” Therefore, he argued it was best to do nothing at all, thereby avoiding setting any precedent.

In advice to Parliament’s Education and Workforce Select Committee in August regarding a petition calling for volunteer firefighters to receive the same coverage as employed firefighters, the Ministry of Business Innovation and Employment and the Accident Compensation Corporation jointly argued that “Expanding work-related cover to volunteer firefighters would be complex to implement. Work related cover is only available for injuries that are caused by work. ACC would continue to need sufficient evidence that a work-related mental injury, disease or infection was caused by the work tasks carried out. This would be less clear cut than it is for paid employees.”

In other words, do nothing. The principle that experienced volunteer firefighters exposed to the same level of risk should receive the same level of ACC coverage as their employed counterparts if injured or exposed to the same carcinogenic risks while doing the same job is apparently too difficult to comprehend. Or that paid firefighters who are fully covered as employees would not be covered if they were working in a voluntary capacity. Therefore, best to do nothing. Advice straight out of Sir Humphrey’s textbook.

It is little wonder so many politicians consider the Yes Minister series was far more a documentary than a comedy. The tragedy is that the attitudes and bureaucratic behaviours it pilloried so savagely in the 1980s are still alive and well in the public service over 40 years and several public sector reform rounds later.

The joint MBIE/ACC advice picks up on Sir Humphrey’s ‘right thing’ warning. They advised the select committee that if the law was changed to broaden ACC coverage for volunteer firefighters, it would have to be extended to include other emergency service volunteer workers such as Surf Lifesaving New Zealand, Coastguard, Land Search and Rescue, St Johns and Wellington Free Ambulance. Well, yes that is obvious and has never been denied by the petition’s sponsors and the United Fire Brigades Association. But it is hardly a valid reason to continue to do nothing.

MBIE and ACC did however concede that the cost of extending coverage to volunteer firefighters would be only $244,533 annually, but then, lest that might persuade MPs to support the petition, quickly fell back on the tried and true ‘thin end of the wedge’ argument. Again, Sir Humphrey would have been very pleased that his advice was being followed.

The sad thing is that while Sir Humphrey’s observations were made in the world of fiction, there are real people suffering today because of the lack of ACC coverage that MBIE and ACC so staunchly defend. If these agencies were genuinely concerned about the categories of volunteers not properly covered by ACC at present, they would have proposed specific possible solutions to the select committee, not hidden behind the many “why not” reasons their official advice contained.

None of the reasons they proffered were insoluble. All could have been easily resolved with a little creative and constructive thinking. But meeting need by providing proper public service is clearly beyond the scope and moral capability of these two agencies and their leaders. Again, conduct the same as Sir Humphrey would have advised. By focusing on process over outcome, MBIE and ACC are seeking to prevent change and the implementation of just, beneficial and fair social policy, an outcome many would describe as bureaucratic failure.

MBIE and ACC concluded their advice to the select committee with the somewhat dismissive observation that “depending on the circumstances, volunteers can endeavour to seek damages through the courts, and prosecutions under the Health and Safety at Work Act 2015 may also be able to provide reparations.” They should be careful about what they wish for.

Any actions by volunteers for compensation through the courts would likely lead to substantial damages being awarded against the Crown, far more than the $244,533 annual cost of extending ACC coverage reported to the select committee.

But then, as Sir Humphrey once told his Minister, “The public doesn't know anything about wasting government money. We're the experts." By their bureaucratic lethargy on the volunteer firefighter coverage issue, MBIE and ACC seem keen to prove this point all over again.

 

There were more MPs at this year’s Taiwan National Day celebrations in Wellington than I can recall in over 30 years of attending this annual event. And they all spoke, recounting favourably aspects of their Taiwan-government sponsored visits to the country, and their admiration for its democratic system of government. They represented all parties in Parliament except the Green Party, and Te Pati Māori (who were too busy fighting amongst themselves). It looked to be a clear sign of support across the House for Taiwan and its achievements.

No wonder the Chinese Government was annoyed. After all, the strong turnout of MPs at Taiwan’s National Day could be seen as a direct thumbing of the collective political nose at China’s constant attacks on any suggestion Taiwan be viewed as an independent state. However, the turnout probably had more to do with the fact that it was during Parliament’s dinner break, and this was a good function for MPs to attend at a nearby venue, before they returned to the House for the evening session.

Nevertheless, that did not stop the enraged over-reaction of the Chinese Ambassador to what happened. In an extraordinary letter to the MPs concerned he denounced their attendance at the function, rebuked them for their temerity in doing so, and warned them they were placing New Zealand’s critically important relationship with China at risk.

Unfortunately for him, all the Ambassador’s intemperate response has done is confirm how little he and his colleagues are prepared to understand how freedom of speech and association works in a democratic society like New Zealand. While China has every right to assert its view that Taiwan is an inalienable part of China, and that the resolution of the Taiwan issue is a matter for China alone to resolve, it has no right to expect its view to automatically prevail over the views of those in this country who hold a contrary opinion.

If MPs attending Taiwan’s National Day celebrations were interfering in China’s domestic affairs, as the Ambassador alleged, then his letter to them was by the same measure an unwarranted interference in New Zealand’s affairs, not to mention an attack on individual rights to freedom of thought and expression.

During my time as an MP, I visited Taiwan several times, meeting senior Ministers and officials, and attending a Presidential inauguration. As a Minister, I met at least one Taiwanese Minister in New Zealand, and on another occasion hosted a dinner where the Chinese Minister and his Taiwanese counterpart sat either side of me. None of those meetings provoked the type of response the Chinese Ambassador showed to recent events. Nor did they threaten or challenge New Zealand’s adherence to the one-China policy followed by all New Zealand governments since 1972. Rather, they focused on bolstering the mutual economic and cultural relationship between New Zealand and a valued trading partner, within the constraints of the one-China policy.

Over the years, both China and Taiwan have shown a commendable subtlety in managing their relationship which has worked well for both, as the increasing free flow of people and commerce between them shows. Countries like New Zealand are becoming well-versed in understanding the dynamic of that relationship and working alongside it. The biggest risk to destabilising the carefully crafted balance now in place is not the attendance of MPs at an annual function hosted by the Taipei Economic and Cultural Office, but a blunderbuss intervention of the type it provoked from the Chinese Ambassador.

However, the saving grace is that in an open society like ours the overbearingly critical words of the Ambassador will quickly dissipate, unlike in China where a heavily managed state media would have made them far more ominous and threatening.

The future of China and Taiwan is for each to resolve. The last thing either need is the active intervention of external parties. But that does not mean, as the Ambassador fails to understand, that other countries or individuals within those countries cannot express or even hold a view on the situation. A peaceful and fair resolution of the tension is in all our best interests, hence the value of ongoing dialogue and association.

For New Zealand, as a small trading nation, maintaining open communication with both China and Taiwan is an important part of our ongoing trade and foreign policies. We need to have good relationships with both. Therefore, although the Chinese Ambassador’s outburst was ill-considered and unfortunate, it cannot be allowed to get in the way of our ongoing relations with both China and Taiwan.