NZ Institute says savings proposal finds "broad based" support

By NZPA

Wednesday 11th May 2005

Independent think tank the New Zealand Institute says it has found " strong and broad-based support" for its radical proposal to encourage New Zealanders to save more.

Last month the institute released a report critical of the current "hands off" government approach to savings and it proposed a $4 billion scheme whereby state subsidised savings accounts would be opened for each person at birth and when they begin working.

Today the institute released the results of a survey of 750 New Zealanders about savings initiatives, including its own proposal.

"The survey results clearly reveal strong and broad-based support for policy initiatives to raise savings and asset ownership in general - and for the institute's proposed policy solutions in particular," New Zealand Institute chief executive David Skilling said.

Support for the institute's proposal was "broad-based, and is consistently strong across geographic areas, incomes, and the political spectrum," he said.

Of those surveyed 64% supported policies to encourage savings while only 15% of people opposed them. A further 20% were neutral.

"These results show that there is a substantial public appetite for policies that promote savings and asset ownership," Skilling said in a statement.

The institute's scheme would see every New Zealand child provided with a savings account containing $500 at birth with the same amount being contributed at five and 10 years. The Government would match voluntary savings up to $200 year so there should be $14,000 in the account at 18 years.

In the workers' account 2% of all taxable income would be diverted into a savings account. Additional savings up to $1000 a year would be matched dollar for dollar for those on the lowest tax bracket and 50c per dollar for others.

Withdrawals could only be made for tertiary education, a first home or to put into a pension.

The institute said its survey had found 61% support for the proposal, 21% neutral on the idea and 17% opposed.

It said the support was consistently strong across main elements of the proposal particularly its withdrawal criteria, suggesting "people welcome policies that address the substantial challenges around student loan debt and first home ownership."

When the institute first released its report, Finance Minister Michael Cullen said the scale of the proposal was radical and the costs would include an overall higher tax rate or lower levels of service in health, education, superannuation and policing.

Today, Skilling said the cost of the scheme was "much less of an issue for the survey respondents".

He said 56% of people continued to support or strongly support the institute's proposals even with information on the expected fiscal cost, a further 23% were neutral, and only 19% opposed the proposals.

That suggested " many New Zealanders think that the proposed fiscal commitment is a worthwhile investment".

"The clear message to take from these results is that politicians ought to take advantage of the current window of opportunity with a healthy economy and a strong fiscal position and take bold action to promote savings and asset ownership."

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