April Fools Day 2007 no joke

Friday, March 31st 2006, 7:35AM

For two days during this past week I have chaired the annual Super Summit that looks at superannuation issues.

One of the benefits of chairing this conference over the years is that it provides a good reality check on superannuation and what current thinking is.

Not unsurprisingly the two big issues were KiwiSaver and tax.

KiwiSaver, as a policy, was roundly condemned by many people, including one large fund manager. There was agreement that it wouldn't do anything to increase the nation's savings rate - it could even make it worse.

However, once that was off a few people's chests, they then acknowledged they had to get on and work with it.
This situation is best summed up by Michael Littlewood - KiwiSaver is a daft policy, he says, however it is great for his superannuation administration business.

We've always known the implementation times to get the scheme up and running by April 1 next year were tight, but let me assure you - after listening to the players speaking - it is no understatement to call it impossibly tight.

Compounding the issue is tax changes. Many a speaker made it clear that tax changes needed to be in place by April 1 to make KiwiSaver work. As Good Returns reported yesterday managers have about three months from the time the bill is signed into law until start date. Considering these changes require major systems overhauls and further data collection from investors it is another huge undertaking.

Sticking with tax it was useful to have the Minister of Revenue Peter Dunne speak, however it was unfortunate his office would not allow him to take questions on the subject. On the plus IRD policy adviser David Carrigan gave some great insight into the department's thinking.
While he addressed only aspects of the discussion paper released last year, as opposed to what is in the paper currently before Cabinet, one would assume the things he talked about were relevant to the Cabinet paper.

Using such logic, which always is a risk, means that Australian investments will be taxed on a flow through basis just like New Zealand ones, Australian franking credits will continue to be of little use to New Zealand investors, and other international investments will be taxed using the comparative value method.

With such a short timeframe to get ready for KiwiSaver and tax changes don't be surprised if managers distracted from their day-to-day business and the first day of the new regime is a mess.

One countervailing factor is that a number of people across the spectrum acknowledge that government departments such as IRD and the Ministry of Economic Development have been excellent to deal with.

Business New Zealand chief executive Phil O'Rielly, somewhat reluctantly noted these comments about IRD: "It pains me to say this... but I know of no other piece of legislation that has had such good consultation process as KiwiSaver."

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