The New Zealand Council of Trade Unions is calling for creation of a new Government-led investment bank, as well as a 'Green' Ministry that would provide infrastructure and housing.
And in its new strategy document Building a Better Future it also calls for creation of a new state-led Kiwisaver provider.
NZCTU Economist Craig Renney said: “We’re arriving at a turning point in New Zealand’s economic history. We need a new economic strategy that reflects our collective goals and aspirations, and we want to start a conversation with New Zealanders about how we create this strategy together”.
NZCTU will be consulting with the public on this report and its policy proposals until early next year and expects to produce a final report in May 2023.
The strategy paper includes five key proposals, with proposals addressing climate change, work-life-balance, and wellbeing.
But also included in these are a 'National Investment Bank' that "delivers our central economic missions". Within this bank there would also be a new state-owned default Kiwisaver provider to hold all default funds.
And then there would be the 'Ministry of Green Works' that delivers adequate housing, "climate resilience, economic equity, decent work and a just transition".
On the proposed New Zealand National Investment Bank (NZNIB), the NZCTU says this would be modelled on the Scottish National Investment Bank.
"The NZNIB will invest where the private sector is not providing sufficient investment and can support projects seeking to improve our economy. It would provide 'patient capital' (First in Last Out) to de-risk projects that have long-term benefits to the New Zealand economy," the NZCTU strategy document says.
"One of the benefits of patient capital is that it allows projects to focus on long term growth and sustainability alongside positive social and environmental benefits instead of needing to maximise profits at pace."
Initiatives the NZNIB could deliver include:
• A new State-owned default Kiwisaver created to provide all new default Kiwisaver services. There are currently around 380,000 New Zealanders in default schemes. This would be an arm of the National Investment Bank and could co-invest in the projects of the National Investment Bank.
• Being a lender for Māori land where the structure of land ownership prevents traditional lending practices, particularly to encourage the development of housing. This is a major market failure in New Zealand and requires significant reform. This section of the Bank would be managed by, and run for, Māori.
• Creating co-financing opportunities. Bonds that are delivering the activities of the NZNIB would be open to other investors such as Kiwisaver funds.
• The NZNIB could be in part funded through a levy on the profits of the largest banks in New Zealand. Banks benefit significantly from the infrastructure and development that the government provides. The ‘de-risking’ that our government investment provides to banks should be recognised financially.
• The NZNIB would be able to take its ‘return’ either in interest or in fiscal savings to the Government generated through its activities. It would only undertake this form of financial return where that saving can be directly attributed to its investment.
The NZCTU report says this bank could help finance some of the activities of the Ministry of Green Works.
In terms of that ministry, the NZCTU says this would be responsible for construction, urban design, architecture, and infrastructure planning, policy, and strategy.
It would:
• Act as an automatic stabiliser in the housing market by examining the number of houses that are in company pipelines and providing reliable levels of work for construction. In times of a construction deficit, it will build more units of housing to meet population needs.
• Provide training and development for construction apprentices, recreating a flow of new skilled tradespeople.
• Deliver new housing and retrofit existing housing to Healthy Homes standards. This will reduce costs to occupiers, lower carbon emissions, and save the health service money through reduced illness.
• Target the development of new housing for Māori, in partnership with both iwi and Māori community housing providers.
• Be a vehicle for central and local government to insource currently outsourced development activities.
• Have the ability to make submissions to Cabinet documents in a comparable way to the Treasury. It will provide commentary (released under the OIA) on government proposals likely to affect deliveries of just transitions. It could also comment on the opportunity cost of not developing a proposal. This would include liability generated for future generations by not taking forward a proposal.
• Be progressively responsible for the delivery of the Three Waters infrastructure. This would retain capacity within the public sector and ensure delivery is driven by need, not profit.
Renney said there are "many voices" calling for a return to normal after Covid.
"We reject a future in which we simply return to all the problems we had before – such as homelessness, inequality, and economic insecurity."
9 Comments
The Government should not be involved in KiwiSaver. Its subsidies (so-called 'tax credits') should cease, and KiwiSaver should be entirely a private savings arrangement between worker and employer. KiwiSaver is simply the current iteration of the savings scheme Roger Douglas imposed on the country in the 1970s and Robert Muldoon mercifully rescued us from.
KiwiSaver is an instrument whereby those who are able to save can do so efficiently (and till we stop it, with a state subsidy) because they are in secure, lifelong, well-paid employment. It is useless to people who are too poor to save, and all but useless to the underpaid and precariously employed.
It was Robert Muldoon who had the good sense to see that what ALL New Zealanders need, not merely the lucky Kiwis who can save, is a national pension for which the only qualifications are to be (1) over 65, (2) a New Zealand resident, and (3) present in New Zealand.
Improving NZ Superannuation, doubling it to cover the cost of renting, and putting people who get it on a high tax scale for other income so that it goes only to those who need it: these should be the goals of any Government that cares for all its citizens, not merely the lucky ones represented by the CTU.
As for the Government taking over the default funds, this is lunatic. Presumably this is a hissy fit because National exploited Labour's incompetent PR and helped the Aussie banks avoid paying GST. The answer to that is for Labour to be less spineless, not to seize the funds and hand them to a state bureaucracy to invest in green projects for zero return. Stop it, I tell you! Just stop your nonsense!
The idea of a state bank for worthy projects sounds superficially attractive. But is it necessary? Long-term infrastructure adds to the nation's (the state's) wealth; it can be paid for simply by printing money.
For ordinary folk, what we need is for everyone to have an account with the RBNZ using a central bank digital currency that allows payment directly from person-to-person or person-to-company, bypassing private banks, whose role can be reduced to deposit-taking and mortgage-lending.
The CTU's enthusiasm for getting its hands on KiwiSaver is rather like its enthusiasm for Grant Robertson's social unemployment insurance: a scheme that benefits the haves, and is of little benefit to the have-nots.
https://www.scoop.co.nz/stories/HL2202/S00026/unemployment-insurance.htm
Kiwisaver seems to basically crowd-out private savings. Personally, I'm only in it for two things: a) getting an employer match, b) getting a government top up for a first house deposit, and c) the annual government contribution. a) is silly because it's clearly just a slice of my salary that is being "matched", and it would be better to get that cash-in-hand so I can allocate it myself. b) and c) are subsidies or perhaps better described as tax rebates (since one has to be paying PAYE to have KiwiSaver contributions). It probably helps some people save who otherwise wouldn't, but I can imagine employer-sponsored opt-in systems that do the same thing without all the bureaucracy.
The KiwiSaver state subsidies are not tax rebates. Put in $1042.86 from any source, taxed or not, in one year and the state will put in $521.43. The Government will call that $521.43 the 'government contribution', but it's actually the contribution of taxpayers, some of whom may be too poor to afford their own KiwiSaver.
As the Good Book says: 'He that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath.' (Mark 4:25)
The Maungatautari Bank
https://nzhistory.govt.nz/the-maungatautari-whare-uta-maori-bank-opens-…
whether we need a national investment bank completely depending on how efficient it performs. as cynical as I am, I don't believe government can use the funds as efficient as it should.
as for infrastructure work, we can compare two systems:
A, the American system, which developers develop the land, including infrastructure like roads, pipes, wires etc, then once building finishes, then hand over the infrastructure back to local councils, so councils get 'free infrastructure' but with reponsibility to maintaining it.
B, the Chinese system, which government build the infrastructure in the land, and then auction the land to developers to build houses. governments controls where/when/ the cities go, and developers just building houses.
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