Before he left parliament, Trevor Mallard lobbed in an idea about using Kiwisaver to control inflation. As the nation’s savings near the $100b mark, others have a few ideas about its future too, writes Anna Rawhiti-Connell in this excerpt from The Bulletin. To receive The Bulletin in full each weekday morning, sign up here.

Mallard’s left-field suggestion on Kiwisaver

Following the response to the government’s attempt to add GST to Kiwisaver fund fees, further tinkering with Kiwisaver could possibly only come from a retiring politician. Trevor Mallard delivered his valedictory speech last week and presented a self-described “left-field suggestion” as a parting gift. Mallard pitched Kiwisaver as an alternative to using the OCR to control inflation. Stuff’s Rob Stock outlines the idea. It’s not new and boils down to a mandatory increase to Kiwisaver contributions to slow the economy and a decrease to stimulate it. Stock writes that it’s prompting both nervous and disbelieving laughter from those he spoke to.

Time to significantly upscale Kiwisaver?

That idea of Mallard’s got the most scrutiny but he also said it was time to significantly upscale Kiwisaver. He called for the reversal of the opt-out bonus, compulsory Kiwisaver for all new entrants to the workforce, a flat employer contribution and an increase to the individual contribution rate. He didn’t mention the issue of New Zealand children born to citizens of the United States. A law change is being called for to deal with taxation red tape that’s costing some people $2000 to deal with.

Kiwisaver a cause for long-term economic optimism

Kiwisaver turned 15 in July. Liam Dann’s latest column (paywalled) reminded me it’s also been 35 years since the 1987 stock market crash. Dann is of the view that we’ll see a market meltdown in the next few months. If you don’t need your Kiwisaver for a while, you can ride it out, but it’s concerning for anyone close to retirement or trying to buy a first home using their Kiwisaver. It’s not much consolation at the moment but Sam Stubbs, founder of Kiwisaver scheme Simplicity, strikes an optimistic tone about the economy, citing Kiwisaver as one of the reasons. “KiwiSaver isn’t a tidal wave of capital, it’s a rising tide…long term, Kiwis will be saving and investing hundreds of billions of dollars, taking us from a capital-starved economy to a capital-rich one.”

Bigger role for Kiwisaver in investing in local business

When we talk about rising interest rates, we often focus on homeowners but a lot of small businesses have their business lending secured by a residential property. As the Herald’s Carmel Hall reports (paywalled), about $2.2b of business loans secured by residential mortgages are due to be re-fixed within the next year. Fisher Funds’ David McLeish thinks Kiwisaver has a bigger role to play in investing in local business. You can get the gist of his thinking here (also listen via the Herald’s Continuous Disclosure podcast) or read his paywalled opinion piece here about the unrealised potential of Kiwisaver.