Kiwisaver Funds for Start-ups

It seems that the National party is the only political party that is taking any notice of the fact that thousands of people are losing their jobs. By the time the election comes around, there will be many more redundancies and the government, still concentrating on the health perspectives of the virus even though we seem to have it completely contained, doesn’t seem to have any economic policies to speak of at all. By contrast, Judith Collins has announced a policy whereby unemployed people wanting to set up in business will be allowed to withdraw up to $20,000 of their Kiwisaver funds to use as start-up capital for a new business venture.

National will give anyone who has lost their job since March 1st 2020 and is wanting to set up a new business a voucher worth $1,000 to go and talk to an accountant or business advisor about their business ideas. A viable business plan needs to be written using a proper accounting system, such as MYOB or Xero.

I love the attention to detail that this policy provides. An advisor, a business plan and a proper accounting system. For those that will immediately rush in and say that 90% of businesses fail in the first 5 years, let me assure you that those who do it properly, like this, are not usually among them.

“We want people to tell us why it is better for Kiwis to have their money invested in Wall Street than their own Kiwi High Street” is Judith’s response to the inevitable critics who will say that this proposal is lunacy. She also emphasises that this is a case of people being allowed to use their own money – something that the detractors seem to forget.

To incentivise the return of the funds to their Kiwisaver accounts, Collins announced that all contributions to new business owners Kiwisaver funds will be tax free until the borrowed money has been returned to their funds.

Another masterstroke of this policy is that, if a person received a redundancy package and then goes into business, the tax portion of the redundancy package will be given as a tax credit with the IRD allowing the business owner to use it for payment of GST or income tax in the future.

Once all of this is in place, Collins says she is confident that banks will then feel comfortable in lending for further capital expenditure or working capital needed.

This is a brilliant, well thought out and meticulously planned policy from the National party, designed to help those who have lost their jobs and want to set up a business. It is also designed to work in tandem with National’s Jobstart policy which gives $10,000 for each new employee taken on and which new business owners will be able to apply for as well.

There are the detractors, of course. In fact, it was easier finding articles from detractors than articles detailing the policy itself, which backs up recent claims of media bias. The obvious concern is that people should not be allowed to withdraw from their retirement savings on any grounds other than what is currently available, such as a house deposit, or hardship.

Collins quotes the Reserve Bank, which has stated that New Zealand faces the worst economic downturn in 160 years. If ever there were reasonable grounds to allow access to Kiwisaver funds in times of hardship, surely, for those that qualify, this is it.

Note the contrast between Labour’s policy of throwing money around like there is no tomorrow, without any reference (yet) to how it is all going to be repaid, and National’s policy, which uses some public funds, but allows aspiring business owners to use their own money to start a business. This is fiscally responsible as well as well planned and meticulously detailed.

Somehow, whenever Labour announces any kind of policy, there is always a significant lack of detail. The media allow them to get away with it, but a proper media would ask a lot of probing questions and would find that, apart from a few slogans, there is often nothing substantive there at all.

I love it. I absolutely love it. Well done National party and well done Judith Collins.

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