Sparkling cynicism

What to make of the 20K Kiwisaver proposal

If I get to take 20K out of my Kiwisaver to start a new business I have a business plan all ready to go, no worries. It’ll be a consultancy. I will come up with ideas for political campaigns. They will be breathtakingly good. Clients will say “dude you're a genius, let's get this into tomorrow's speech, and can you make it go virus, is that how you say it?”

These genius ideas won’t have any show of working, but that's not the point. They will be nice and simple and sound like something that would probably work as long as you don't stop and actually think about it. And here's the best bit: they will cost the government no money. 

A simple short cut idea that costs the government no money is the kind of idea the National party really likes a lot. This seemed to be the thinking behind this week’s offer by pop-up leader Judith Collins. 20K from your own kiwisaver to start your own business. They don't believe in a hand out or a hand up. They believe in taking your hand and shoving it into your own cookie jar.

What’s so wrong with that? Shouldn't we be giving people a chance to be their own boss? Shouldn't every kay-one-double-you-one have his or her chance to shine? You bet. But this really doesn't look like the way to make it happen. 

A 20K dip into your Kiwisaver might be all you need to get started, but it could also fall victim to the great human propensity to pour the concrete before you put in the boxing. It’s not easy to fire up the engine and keep it running, all too easy to become one of the 50% of businesses that fail in the first five years, the 20k gone forever from your retirement savings.

The prospects improve with some backup, some diligence, some advice, someone giving you some feedback, checking against some sound criteria.  Who can you turn to? How about the government’s Business Start up Fund or its Small Business Loan Scheme or its Flexi Wage Subsidy? How about the regional business partner schemes, and the network that spans the country of volunteer mentors  who will help almost any business for a very low one-off fee. A bit of support, a bit of socialising a certain amount of risk: it might sound a bit socialist, but it’s socialism to help you become a capitalist. 

Missing in action in all of this, of course, are our magnificent trading banks, headquartered in Melbourne and Sydney. If you want to borrow to start a business, it's an Everest to climb. If you want to put yourself in the housing market, they'll fall over themselves to submerge you in mortgage debt. Boy do they love our housing Ponzi scheme, boy do they hate anything that looks like risk or an expansion of the productive economy. When lockdown arrived we saw  them cover themselves in glory by being cautious to a fault even when the government made it clear there would be risk sharing and underwriting to help carry the nation through uncertain times. Thanks for nothing, you magnificent human beings.

Perhaps we could see this week’s proposal as the National party filling the free enterprise void vacated by the trading banks. Or not. 

What makes this so dismal is that it perpetuates a National party tradition of undermining our long term good. Half a century ago they binned a super scheme that could have done immense things for New Zealand. No sooner was Kiwisaver underway than they were back in government and cutting its knees off by diminishing employer contributions and cutting payments to the fund, thereby missing out on some tens of billions in returns. Now they propose another carve-out to Kiwisaver that sets it up to be not so much a pension fund as a savings account. 

They keep declaring themselves the best at managing the nation’s money; and yet keep failing to adequately prepare and plan for the future. This might perhaps be economic wizardry, from the Muldoon region of the party. But it’s probably just sparkling cynicism.