High inflation delays first Fed rate cut, holding up NZ mortgage rates for longer; Insurance costs spiral in structural shift due to climate change; $1.1b of benefits paid to 50,000 earning >$100k/yr
Why not? If someone has the means to retire at 65, but some else needs to keep working because they do not, that doesn't seem like a particularly fair situation. It's another tax directed at income rather than wealth.
A very good argument Simon to keep things as are. They have means testing in Australia and every year a person has to submit a very long list of everything they own, and its value, in order to continue getting superannuation, or whatever they call it over there. But if they think something has to be done, and quite frankly it doesn’t, then I would rather see it on income than wealth and not on any cuts on beneficiaries income. However It would become the thin edge of the wedge and we don’t want that.
Income testing minus the annual cost of renting seems fairest to me. There are too many ways to cover up assets that means testing doesn’t seem worthwhile. There is a huge difference in the comfort level of a renter earning 100k and a paid off home owner
I'm incredibly cyncial about ANZ's call for higher interest rates. There are too many signs that the economy continues to be in recession and a further move upward in interest rates will only deepen the recession without having a particular impact on inflation. RBNZ data shows the average rate on home loans in NZ increased 13bp in December - thats half a normal OCR tightening in one month thats likely to be repeated in January. The tightening of monetary policy continues without having to move the OCR. ANZs own data today shows reductions in tradeable inflation continuing to tick through and they openly said there is downside risk to their next inflation forecast. Businesses who carry debt are at the point where they need to put prices up to cover the increasing cost of the interest, pushing interest rates up further may actually push the domestic inflation rate up!
The cynic in me suggests ANZ's trading position might need to be investigated prior to that announcement. Lets keep an eye on their trading profits in their half year results.
"Why are we concerned about what Mike Hosking has to say! "
Exactly. Stopped listening to him years ago. My mental health has never been better. He's moved from being journalist (at times a bloody good one) to being a troll.
Hi YS. It would be quite tough to do that. For the extra $40,000 (between 90,000 and 130,000) you would need to impose a nearly 60% surcharge. Given a tax rate of 33% on this income already that means an effective rate of 93%. I posted a better way to do this above.
Bernard thanks for highlighting this issue. Good to see some sense being talked about the fiscal pressures of ageing instead of putting our collective heads in the sand.
We can easily save 10% of expenditure (over $2 billion currently ) without hurting anyone. We used to gain 10% saving from the old surcharge- this is a more sophisticated simpler way of doing that. It has many advantages of the other levers like age and level and means testing if costs are to be constrained.
Can we please not make the same mistake with super that we are with benefits - means testing is expensive and inefficient as you'll need to hire an army of bureaucrats to administer a complex set of means testing criteria.
Make super and all benefits universal and raise taxes to claw it back on those who can afford it to pay for it, as is often done in Scandinavia.
Broad base, low complexity, and fair should be the ideal for benefits as for tax.
I agree don't go near means testing. Imagine that massive team of interrogators having to also crawl around checking who our 80 - year- olds are sleeping with.
But Bernard... Many economists and property industry friendly (funded) media have been telling us that OCR cuts are going to happen imminently and another 'golden age' in property prices is just around the corner.... They couldn't possibly be wrong. Economists... Never!
Thanks Bernard. I’d like this opened for general access
Means testing of superannuation seems a great way to save a lot $$
How could the Min of Fin not agree?
Dave they are talking about INCOME testing not means testing. There is a big difference. Income testing is sensible. Means testing is not.
Yes Bernard. Open it up.
Why not? If someone has the means to retire at 65, but some else needs to keep working because they do not, that doesn't seem like a particularly fair situation. It's another tax directed at income rather than wealth.
A very good argument Simon to keep things as are. They have means testing in Australia and every year a person has to submit a very long list of everything they own, and its value, in order to continue getting superannuation, or whatever they call it over there. But if they think something has to be done, and quite frankly it doesn’t, then I would rather see it on income than wealth and not on any cuts on beneficiaries income. However It would become the thin edge of the wedge and we don’t want that.
Income testing minus the annual cost of renting seems fairest to me. There are too many ways to cover up assets that means testing doesn’t seem worthwhile. There is a huge difference in the comfort level of a renter earning 100k and a paid off home owner
Of course. Thanks for correction.
I'm incredibly cyncial about ANZ's call for higher interest rates. There are too many signs that the economy continues to be in recession and a further move upward in interest rates will only deepen the recession without having a particular impact on inflation. RBNZ data shows the average rate on home loans in NZ increased 13bp in December - thats half a normal OCR tightening in one month thats likely to be repeated in January. The tightening of monetary policy continues without having to move the OCR. ANZs own data today shows reductions in tradeable inflation continuing to tick through and they openly said there is downside risk to their next inflation forecast. Businesses who carry debt are at the point where they need to put prices up to cover the increasing cost of the interest, pushing interest rates up further may actually push the domestic inflation rate up!
The cynic in me suggests ANZ's trading position might need to be investigated prior to that announcement. Lets keep an eye on their trading profits in their half year results.
Thanks for an interesting read! Definitely happy to have this opened up for general readership.
Why are we concerned about what Mike Hosking has to say! Are we expecting him to play God!
Interest rate rises - we don't need them.
Mortgage holders don't need them. There is no justification for further interest rate increases, no matter what the banks tell us.
Means testing to receive NZ Super should be on the table. This needs to be opened up to universal readership.
income testing (not means testing)
"Why are we concerned about what Mike Hosking has to say! "
Exactly. Stopped listening to him years ago. My mental health has never been better. He's moved from being journalist (at times a bloody good one) to being a troll.
We really need to bring back the 1995 to 1998 surcharge. Deeply unpopular of course.
But a claw back tax on super anuitants so they paid back super starting at say 90k and disappearing at 130k would be entirely fair.
Hi YS. It would be quite tough to do that. For the extra $40,000 (between 90,000 and 130,000) you would need to impose a nearly 60% surcharge. Given a tax rate of 33% on this income already that means an effective rate of 93%. I posted a better way to do this above.
Please open it
Please open this for discussion. Extremely informative and important information to share.
Means testing or clawback?
income testing (not means testing)
Bernard thanks for highlighting this issue. Good to see some sense being talked about the fiscal pressures of ageing instead of putting our collective heads in the sand.
PIE (formerly RPRC) has researched a feasible, simple income test that does not sacrifice the good things about NZS ( eg universality, simplicity, age 65 indexation to wages). We suggested changing NZS into a genuine basic income in a 2019 paper for the Retirement Commission. Treasury kindly did the modelling and costing for this approach in 2019 and for an update in 2021. I am working on a 2024 update. Here is the 2021 paper https://www.auckland.ac.nz/assets/business/about/our-research/research-institutes-and-centres/RPRC/PensionBriefing/Pension-briefing-2021-2-NZS-as-basic-income.pdf
We can easily save 10% of expenditure (over $2 billion currently ) without hurting anyone. We used to gain 10% saving from the old surcharge- this is a more sophisticated simpler way of doing that. It has many advantages of the other levers like age and level and means testing if costs are to be constrained.
Instead of indexing super to wages would it be better to link it to the household cost of living index that is specific to super?
Those higher earners pay more tax on tgei
Those rich people on
Those rich people pay higher tax on their super.
I am 70 and still work, certainly do not earn > 100k! They have cut my pension by a certain amount not sure if this is the norm.
Can we please not make the same mistake with super that we are with benefits - means testing is expensive and inefficient as you'll need to hire an army of bureaucrats to administer a complex set of means testing criteria.
Make super and all benefits universal and raise taxes to claw it back on those who can afford it to pay for it, as is often done in Scandinavia.
Broad base, low complexity, and fair should be the ideal for benefits as for tax.
I agree don't go near means testing. Imagine that massive team of interrogators having to also crawl around checking who our 80 - year- olds are sleeping with.
income testing (not means testing)
income testing is simple.
Jeeze Bernard, thanks for the downer....=)
But Bernard... Many economists and property industry friendly (funded) media have been telling us that OCR cuts are going to happen imminently and another 'golden age' in property prices is just around the corner.... They couldn't possibly be wrong. Economists... Never!