Latest / Best of Business / Sam Stubbs: Simplicity co-founder on Nicola Willis mulling over changing KiwiSaver contributions

Transcript

Sam Stubbs: Simplicity co-founder on Nicola Willis mulling over changing KiwiSaver contributions · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks EDB. Follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio and.
• 0:16
  Speaker 2: The default can we say the contribution rate could be
• 0:19
  Speaker 2: on the rise. Finance Minister Nikola Willis is currently seeking
• 0:23
  Speaker 2: advice on what key we Saver needs to look like
• 0:26
  Speaker 2: in the future, which could include increasing the default setting
• 0:29
  Speaker 2: from three percent. With our agent population, Willis says she
• 0:34
  Speaker 2: wants to see balances rise so key wes are more
• 0:37
  Speaker 2: financially secure and retirement to discuss the future of can
• 0:40
  Speaker 2: we Save our simplicity? CEO Sam Stubbs is with me.
• 0:43
  Speaker 2: Thanks for your time this morning, Sam Curata, Okay, are you
• 0:48
  Speaker 2: encouraged that the Finance minister is seeking advice and looking
• 0:51
  Speaker 2: into the future of key we Saver? It is long overdue.
• 0:54
  Speaker 3: Yes, yeah, yeah, Look, I'm very encouraged, particularly from a
• 0:58
  Speaker 3: national lead government. You know, keep Saver was a labor
• 1:01
  Speaker 3: government invention and what you've seen over the years is
• 1:05
  Speaker 3: the sort of labor led governments tenderly see alone and
• 1:09
  Speaker 3: national lead governments have tended to chip away to the bit.
• 1:12
  Speaker 3: So I think this is a really important turn in
• 1:14
  Speaker 3: terms of direction, and I think it's a recognition of
• 1:17
  Speaker 3: the fact that we just have to say more for
• 1:18
  Speaker 3: our retirement because unless we do national superannuation in the
• 1:22
  Speaker 3: cost of health particularly, well, we'll eat up our current
• 1:26
  Speaker 3: tax space. You know, if you look at the current
• 1:29
  Speaker 3: tax collection from all income taxes, while by twenty fifty,
• 1:33
  Speaker 3: unless we do something about it, it will be entirely
• 1:35
  Speaker 3: spent on national super and health. You know, there'll be
• 1:38
  Speaker 3: nothing there for schools, hospitals, prisons and anything like that. So, yeah,
• 1:42
  Speaker 3: we will need to do something about it. This is
• 1:45
  Speaker 3: a very encouraging signal.
• 1:47
  Speaker 2: It's a really positive out look you've given us there, Sam, Yeah.
• 1:51
  Speaker 3: I know, I know, Well it could be really good.
• 1:54
  Speaker 3: I mean, I mean, look, here's the good side of
• 1:57
  Speaker 3: all of that. So if you look at what key
• 1:59
  Speaker 3: We Saber managers put into New Zealand now it's about
• 2:01
  Speaker 3: thirty percent of their investments. It's nothing changed in key
• 2:06
  Speaker 3: We Sabor. By twenty fifty we will be about a
• 2:09
  Speaker 3: trillion dollars and at KEW Saber managers would have invested
• 2:13
  Speaker 3: another two hundred and forty or one hundred and fifty
• 2:15
  Speaker 3: billion dollars in New Zealand. And that's if nothing else change, right,
• 2:18
  Speaker 3: that almost plugs our infrastructure gap. But if contributions start
• 2:21
  Speaker 3: rising and we start getting closer to countries like Australia,
• 2:24
  Speaker 3: that amount could go up significantly. So I am actually
• 2:28
  Speaker 3: extremely optimistic. I do think we're entering the next thirty
• 2:33
  Speaker 3: years I think will possibly be the most prosperous in
• 2:35
  Speaker 3: our history. And it's because for the first time ever,
• 2:38
  Speaker 3: we are saving our way to prosperity. Like we say,
• 2:40
  Speaker 3: the key we save is probably the most important piece
• 2:42
  Speaker 3: of legislation we've had in this country for decades. And
• 2:46
  Speaker 3: because we will be investing that money, and I think
• 2:48
  Speaker 3: a lot of it has to go into infrastructure and housing,
• 2:50
  Speaker 3: because nothing else really moves the needle, you know. Everything
• 2:53
  Speaker 3: else is a rounding era. From an investment point of view.
• 2:55
  Speaker 3: Only housing and infrastructure can soak up that amount of money.
• 2:58
  Speaker 3: If we're going to be doing that, then we will
• 3:00
  Speaker 3: actually start to be building you know, the roads and
• 3:02
  Speaker 3: the hospitals and the schools that we need with our
• 3:03
  Speaker 3: own money. We won't have to bring it in from
• 3:05
  Speaker 3: overseas and we won't have to borrow it. It's a
• 3:07
  Speaker 3: very very you know, optimistic future. But the more we save,
• 3:11
  Speaker 3: the more we'll have to invest in the better off
• 3:13
  Speaker 3: will be.
• 3:14
  Speaker 2: So Sam, the current default rate, the key we save
• 3:16
  Speaker 2: us three percent, should that be increased?
• 3:19
  Speaker 3: Yeah, look it should be. If you if you have
• 3:21
  Speaker 3: a look at what the average key we saver says,
• 3:24
  Speaker 3: it's three percent from the employer and three percent themselves.
• 3:26
  Speaker 3: So it's called that six percent in total. If you
• 3:28
  Speaker 3: look at a country like Australia which has a very
• 3:30
  Speaker 3: successful policy there, that's already twelve percent, and most of
• 3:35
  Speaker 3: the OECD countries now have got higher than six percent
• 3:37
  Speaker 3: contribution rates. We're still we're going to have to do
• 3:39
  Speaker 3: that because we're going to be living longer and healthcare
• 3:42
  Speaker 3: is only going to get more expensive, and we all
• 3:44
  Speaker 3: want to be living in a nice home. And you
• 3:47
  Speaker 3: know what you've started to see now in New Zealand
• 3:49
  Speaker 3: as more and more people needing their own homes. You
• 3:51
  Speaker 3: have widows and widowers living by themselves for longer and
• 3:54
  Speaker 3: so on. So we need, you know, more housing, more hospitals,
• 3:57
  Speaker 3: and more money because we live longer. So we're going
• 4:00
  Speaker 3: to have to get those contribution rates up for sure. Now.
• 4:02
  Speaker 3: The way to do that is slowly, you know, you
• 4:04
  Speaker 3: don't do it dramatically because it's money out of out
• 4:08
  Speaker 3: of people's pockets. So if you have a look at
• 4:10
  Speaker 3: what a successful countries have done to increase it by
• 4:12
  Speaker 3: about a half a percent a year, that allows it
• 4:14
  Speaker 3: to get built into wage negotiations, everybody gets ready for it.
• 4:18
  Speaker 3: I do think it has to be bipartisan. You know,
• 4:20
  Speaker 3: if national brought something in here as a policy, it
• 4:22
  Speaker 3: would be nice to see labor endorsing it, or if
• 4:25
  Speaker 3: they were to change it, only change it very at
• 4:27
  Speaker 3: the margin. But there's a well trocked trodden path here
• 4:32
  Speaker 3: globally as to how you do this. We don't have
• 4:33
  Speaker 3: to do anything new, We just have to do what's
• 4:35
  Speaker 3: worked elsewhere.
• 4:36
  Speaker 2: SA would you like to see it made compulsory.
• 4:39
  Speaker 3: I absolutely would, because the only problem with Kiwi save It.
• 4:44
  Speaker 3: I mean, it's an absolutely wonderful scheme, but the only
• 4:47
  Speaker 3: thing I don't like about it is that if you
• 4:49
  Speaker 3: don't contribute effectively, what it's doing is it's making those
• 4:51
  Speaker 3: who contribute welfare and those who don't pourer. So the
• 4:55
  Speaker 3: key we save a risks discriminating against the poor. If
• 4:58
  Speaker 3: it's left as a voluntary system, the people who most
• 5:01
  Speaker 3: need it, that the people who most don't want it,
• 5:03
  Speaker 3: you know, or don't want to save, so you really
• 5:05
  Speaker 3: have to actually force them to do this so that
• 5:07
  Speaker 3: they have a pool of money and with that money
• 5:10
  Speaker 3: comes choices and dignity in life. Actually think it should
• 5:12
  Speaker 3: probably should be actually compulsory from birth, and I think
• 5:15
  Speaker 3: the government should be providing some sort of subsidy from
• 5:18
  Speaker 3: day one. There it's but elsewhere in the world it
• 5:23
  Speaker 3: is pretty much compulsory in most WECD countries. Now it's
• 5:29
  Speaker 3: almost that now in the sense that you know, you
• 5:31
  Speaker 3: get put into it and you have to consciously opt
• 5:33
  Speaker 3: out of it. But if those people who are opting
• 5:35
  Speaker 3: out of it, particularly those the poorer people who will
• 5:38
  Speaker 3: most suffer later in life for not having a pool
• 5:41
  Speaker 3: of savings.
• 5:41
  Speaker 2: I can remember my Australian family all winging in nineteen
• 5:44
  Speaker 2: ninety two when it became compulsory in Australia, and now
• 5:46
  Speaker 2: they're all just sitting back and laughing. What about tax?
• 5:50
  Speaker 2: Would you change how we tax? Can we save?
• 5:52
  Speaker 3: The look? I think how can we save? As tax
• 5:56
  Speaker 3: is really taxed is really a subset of how we
• 5:58
  Speaker 3: tax out our citizens generally. So while in an ideal world,
• 6:02
  Speaker 3: I'd like to see the contributions and the accumulation be
• 6:05
  Speaker 3: tax free, and that gets taxed, you know when you
• 6:08
  Speaker 3: take it out. I think that's been very successful elsewhere.
• 6:10
  Speaker 3: I don't have any expectations that governments will change that
• 6:14
  Speaker 3: because that would involve a border change of the tax system.
• 6:17
  Speaker 3: It doesn't matter in the sense that as long as
• 6:20
  Speaker 3: the contribution rates are righting, as long as it's compulsory,
• 6:23
  Speaker 3: then you'll end up having a wonderful system. Going back
• 6:26
  Speaker 3: to your Ossie point of view too, Like, here's a
• 6:28
  Speaker 3: really interesting statistic. Australia has five times our population rate,
• 6:32
  Speaker 3: but they have thirty five times our retirement savings. That's
• 6:35
  Speaker 3: why when you go to Sydney, Melbourne and Brisbane and Perth,
• 6:38
  Speaker 3: you know the roads are wider and the buildings are taller,
• 6:40
  Speaker 3: and the infrastructure just so much better. Right, So if
• 6:43
  Speaker 3: you save, you can invest in. The Australians have about
• 6:46
  Speaker 3: half of their four trillion dollars that they have saved
• 6:49
  Speaker 3: invested in their local economy and it's funded an awful
• 6:52
  Speaker 3: lot of the infrastructure and Aussie and that's exactly what
• 6:56
  Speaker 3: could happen here now. But we do have to have
• 6:58
  Speaker 3: I think rising contributions, not only at the personal level
• 7:02
  Speaker 3: because you know you're saving more, but also from an
• 7:04
  Speaker 3: investment level too. If people keep on saving more than
• 7:07
  Speaker 3: we can make much longer term investments. Kiwi Server Funds
• 7:10
  Speaker 3: could end up owning you know, the ports, the toll roads,
• 7:12
  Speaker 3: the electricity distribution systems, and it would be us investing
• 7:16
  Speaker 3: in the hot it would be you know, qe s
• 7:18
  Speaker 3: it's owned by Kiwis for Kiwi's That would be very cool.
• 7:22
  Speaker 2: Sam Stubbs, as always, really appreciate your time. Thank you
• 7:24
  Speaker 2: so much.
• 7:25
  Speaker 1: For more from News Talks B Listen live on air
• 7:28
  Speaker 1: or online, and keep our shows with you wherever you
• 7:31
  Speaker 1: go with our podcasts on iHeartRadio