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The carrot I propose is simple :
Superannuation
Policy detail
- A tax-free income level of $16,100 - $20,650 equivalent to a ($3,000 -
$4,000) tax reduction.
- Increased by the rate of inflation each year.
- Available to New Zealand citizens between the age of 18 and 65 in the
workforce.
- Must be invested in shares/bonds, property etc in an approved manner.
- Those who wish to do so can make the choice to continue to pay current
levels of tax and be covered by current government benefit system.
- The transition to new super scheme would take 45 years when 95% of New
Zealanders are expected to have sufficient savings to provide for themselves.
- Capital after 47 years in the workforce without draw down would be
approximately $1.8 million or $850,000 in real terms. See Chart 1
- During transition retirees will receive two pensions, one based on fund
accumulated via tax savings each year. Second a percentage of the existing
government benefit, dependent on the number of years before individual turns
65. See Chart 2
- Minimum combined benefit during transition to be at least what people get
today but in most cases will be considerably more.
Paid for by a mix of the following:
Existing surplus.
Reduction in welfare payments as people move back into the workforce.
Reduction in tertiary education costs when some people decide to keep
$4000 tax reduction rather than spend it on tertiary education.
$4000 clawback from tertiary students and any remaining welfare
beneficiaries
Reduction in existing government expenditure.
Reduction in government interest payments. See page 10
Additional government income via growth in direct and indirect taxation.
The stick is even simpler :
If you are on welfare you draw down on the $4,000 tax reduction before the
government contributes a dollar - the cost of being on unemployment, sickness
benefit, ACC or DPB is considerable e.g. an 18 year old who draws down his/her
$4,000 forgoes a capital sum of around $90,000 at 65.
Welfare
Policy Details
- All employees to take out an insurance cover against accident,
sickness and unemployment (could be part of employer scheme).
- Insurance cover is for no more than 26 weeks each year.
- Minimum insurance policy cover to be at least equal to what the individual
would receive from the government if they went on a benefit.
- Premiums to be paid for by employer 50%, by employee 50% (via tax
reduction plus tax credits for low-income families).
- First 26 weeks covered by:
- Any stand down period.
- Any employment rights (award/employment agreements)
- Draw down on super credits (up to $4,000 in anyone year $8,000 for a
couple).
- Government contribution if 1 and 2 insufficient.
- Second 26 weeks covered by insurance policy.
- Reduction in government expenditure within 2 years equal to approximately
$3000 million
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