How the NZ election could change your pay, your KiwiSaver and your rental

0:01Coming up in today's episode, New Zealanders voting on the 7th of November, the big election. We wanted to make sure that you felt educated around all things financial policies.

0:10Vic: Here we savor taxes, your portfolio, we get into it all. This is The Curve Weekly where we read the finance news so that you don't have to. I'm Vic Harris, a finance professional who's made a career making money for other people. And I'm Sophie Hallwright, XTV and radio producer who was sick and tired of not understanding the economy, how to invest or build my wealth, so we started this podcast. But before we dive into the headlines, here's a word from today's sponsor.

0:59at pathfinder.kiwi. This is a bit exciting. So today we're doing a election special. And when I say this is a bit exciting, I will say I'm a bit nervous for this one. I am notoriously uneducated when it comes to anything to do with politics.

1:18Vic: Did you even know the election was going on in New Zealand? I feel like. No, because, no, there have been a few friends that have said to me, have you enrolled? Have you enrolled? And I'm like, yes, oh my God. Oh, I know my mum. Yeah. You know, you've got one week left to enrol. But no, it's landed back in New Zealand and straight into the thick of the election. Everyone's chatting, you know, are you voting national? Are you voting Labour? It's very, people can be very judgmental with. Oh, totally. Yeah. It's quite like it defines you. You're actually so right. It's almost like a lot of people don't.

1:51There's the people who are really comfortable splashing their, what they're voting for loud and clear. and it's actually almost part of their personality. They want to be vocal about it, which I totally respect. If you're educated enough and you feel confident in your views and why you're voting a certain way, I'm so here for that. I'm obviously a sheep who sits in the corner and just listens to everyone. But then the opposite is so true. A lot of people hold their cards really close to their chest and some couples don't even discuss between them who they're voting for. It's contentious.

2:25Vic: but it's like if I asked you oh where do you buy your coffee and you're like oh from this coffee shop and I was like oh I buy it from this coffee shop and because you buy it from that coffee shop it I am assuming making huge assumptions about you as a person do you know what I mean like it just because you're voting one way instantly someone makes a judgment about you and what you what your values are, what you prioritize, all of that. I'm so guilty of that. So guilty of that. I really, yeah, and I've changed a lot over the years with my judgments that I'll pass in my brain when someone tells me who they vote for.

3:02I've gone through waves of being really impressed when someone votes a certain way, really embarrassed and feel like I don't know someone if I find out they vote. It's so silly. Even with my parents, I have had a massive rouse with my dad before around who he's voting for. And I don't know the first thing about the policies for the party he's voting for. I just inherently have heard all sorts of snippets and bits and pieces and therefore make a judgment. It's really bad. I need to make an effort to not do that.

3:32Vic: But I also find it really exciting. Like if someone's voting or got views on things that are so different to me, I'm like, I want to know why. I want to know, like, do you know what I mean? Like, I want to go to a Trump really because I would never vote for Trump but I'm so intrigued to understand the thinking behind why people do and so like just to not only educate myself but just I just find it so fascinating that we all live in this world and like the whole nature versus nurture and like propaganda and like what we're fed and how like society it's just yeah I find it so fascinating there's so much to it so much trouble my initial thought when someone says that they vote green for example I'm like oh amazing they really care about the environment if someone says that they vote national I instantly assume the main thing that they care about is the economy or money if I hear that someone's voting left for labor I assume that they're really conscious about the collective and spending money on you know health care and community housing that you know but that's not coming from me looking in granular detail at what their policies are year to year because it can change what what a party is standing for?

4:45I voted national and Labor throughout my short political voting time

4:53Vic: frame. Can I ask, did you swap because their policies or as a person you changed quite a lot about what you cared about? Was it a combination of the two? No, it was Labor. Gosh, it was so long ago. Labor was bringing in interest-free student loans or something around the interest on student loans. And so I was like, I was a student at the time. I was like, yep, okay, that directly affects me. I want you to be in power. So it was policy driven. This is the thing that I, again, I really am concerned that so many people are going to come for me after this episode. But the main thing that I find hard to wrap my head around, a lot of people vote for a party just like you you know something that directly impacts you but with no context for the broader policies and that I assume is kind of annoying because it's all marketing it's all marketing and it's all psychology and knowing the people that are going to vote for you based on small things that you can do that are going to impact a large enough group of people that you get the votes to get you in it's not a holistic vote it's exactly like investing you know it's like you cannot like you cannot create policies that are going to be beneficial to every single person so you come up with a broad-based policy that is hopefully going to be attractive to a majority of people and voters and it's the same with you know creating investment products creating funds like creating etfs like people that you they're created because the majority want to invest in this product, but it's not going to please everyone.

6:38Vic: And so it's like, you kind of, you pick and choose. You're like, yeah, okay. Like there's probably some investments in there that I'm not like a hundred percent okay with, but 99 % are, do you know what I mean? Like you kind of, yeah. But this is exactly what I think is important. If you're making a decision where, yeah, 99 % of what a party stands for, you're okay with, and some of it you're not. But if you're okay with 1 % and you don't know what the other 99 % is, that's where I think, I mean, you've got AI now. Ask it a million questions about the key policies and key areas. No, listen to this podcast.

7:16I mean, obviously listen to this podcast, but in this one particularly, we're mainly going to focus on the financial. So if after listening to this, you think, fantastic, feeling a little bit more on top of what everyone's offering or saying they're going to be doing, go and look at the other key pillars and just figure out what holistically feels best for you I'm really looking forward to digging into the financials we've done this once before a couple of years ago and it was really helpful because the impact on you as a person financially how things will impact you how will the country be impacted financially by decisions that certain parties will be making that therefore impact you they're quite massive important things to consider when it comes to who you vote for.

7:58And so today we're going to really look at the key financial policies that these parties in New Zealand, apologies that this is a really New Zealand-centric episode, but we know a huge amount of our audiences in New Zealand or New Zealanders. So hopefully this is helpful for anyone feeling a bit overwhelmed by what or who to vote for.

8:18Vic: Yes, and I just want to say we're not going to cover all the policies because there is so many. But as I've said, we're going to cover the kind of the financial ones. And the biggest one that is across every single party in this election is KiwiSaver. And it is honestly music to my ears because they're all pro getting more people into KiwiSaver, contributing more, you know, more money for younger people in KiwiSaver, just everything. And so I'm just like, oh my goodness, this is so, so great. Finally, politicians have realized the sooner that you start investing, the better. The more you invest, the better.

8:53Vic: and they're really trying to encourage people in New Zealand to do that. We've spoken before about Australia's super policies and how, am I right in thinking most people have 12 % of their pay going towards their super? It's quite high. Yeah, and the employer pays it all. Yeah, and we've been, wait, the employer pays matches up to 12 % or? No, the employer pays the 12%. Oh. So it's not six and six. The whole 12 % is the employer, but it's a part of your package, right? Yes, yeah, yeah. Oh my God, that's right. Because I do remember I accepted a package once for a job in Australia. And they were like, it's 80 ,000.

9:29I was like, brilliant. And then I found out that there was 12 % of that that was super.

9:33Vic: And I was like, I didn't know. They were like, that's your fault. You're still getting the money. What do you mean I can't spend it? It's pretty amazing that like finally New Zealand is starting to shift towards that number being higher. Because it's going to not only impact individuals having more when they retire, but also it takes so much more pressure off the government. 100%. And this is the whole thing. It's like they're looking at the amount of older people versus younger people and the imbalance and something needs to change. Otherwise, we're going to be up Schitt's Creek. The whole balance of an economy is that you have younger people paying taxes and they pay for pensions, healthcare, and everything for when people are older.

10:17Vic: When that gets thrown out of balance, huge, huge problems because now you don't have enough taxes to pay. You know, if you've got baby boomers, you've got more older people than younger people, like it's a real headache for governments. So they're kind of trying to get ahead of it by realising, you know, when we are 65 or when, you know, kids nowadays are 65, it's going to, you know, how can we get ahead of this and solve this problem so that it's not, you know, oh shit, once we get there. Do they have a collective kumbaya where all the parties talk about the main issues that they need to solve and then everyone goes away and comes up with their policies?

10:52Or is this just happens to be that everyone realizes, okay, we all need to sort out the KiwiSaver situation?

10:59Vic: Yeah, I think it's, it's obviously they do so much research about being like, okay, what's on, what are the biggest issues? What are people most concerned about as well? And how can we solve those? Because if we solve those, we get votes. Well, I mean, just in general, it's quite good though that all of them are coming together and realizing, You know, if they're not having these big team meetings. They're definitely not. Yeah, they're not. They're not friends. I get that. I've seen them talking to each other. It's not a good time. Oh, it's so rude. God, it's awkward. They're like, no, Peter. Peter, I'm talking.

11:31I'm like, oh, my God, I could. I'd be the most pathetic politician.

11:35Vic: And it's like, oh, you're racist. And it's like, no, you're racist. I'm like, oh, my God, guys. Like, can we just be human? It's so lullier, isn't it? Still, like, I would hate to be a politician. Like honestly, you get ripped to shreds. You have to have a lot of thick skin, honestly, and just be able to brush stuff off. This is the first time in as long as I can remember, because I've always been paying very close attention to the policies for all the years. This is the first time KiwiSaver has been front and centre. Everyone should care about this. And what we're doing to solve the problem is XYZ.

12:09Vic: Yeah, it's been called a KiwiSaver election. I love that. I know. And I'm like, oh, how great. like perfect time to it's my election I'm so glad everyone's finally listening to me maybe I should be a politician imagine sorry guys thanks for transferring my money to the curve fund but I'm actually going into politics I could see it for you I know I've said this before but I could see it for you you would be very good at having a thick skin no I no it's more than a thick skin though I just I get so pissed off without not being able to do shit you know You'd be good on like a – Talking about something for 10 years and not being able to bring about change.

12:49Vic: Oh, true. Screw that. You'd be like, what's the next? I'd be like, right, okay, we're going to give parents 12 months paid paternity leave and people would be like, no, we're not, no, we're not. You know, like, no, just – The kid will have already put it through. No one will have even replied to her emails and she'll have already made the change. Yeah, totally. Yeah. Okay, right. So let's look at some of the parties in a little bit more detail. Shall we start with National? So we have two big parties in New Zealand, National and Labour. And National, they're wanting compulsory KiwiSaver for all workers from 2028 and gradually lifting the contributions from their 3.5 % at the moment to 6 % for employers and employees.

13:33Vic: so that would get to the 12 % that Australia has by 2032. Can I just clarify these numbers? Are you saying that they're aiming to get 6 % from your employer and 6 % from the individual so that the total being contributed every year? 12%. Yeah, it's 12%. Same percentage figure as Australia but different makeup. And they're trying to reach that by 2032? Yeah. Why does it take so long? If you introduced a jump from three and a half to six for both employers and employees right now, you would, there'd be like civil unrest, I think. People are already feeling super tight in terms of cost of living, inflation, all of that.

14:25Vic: Like the economy is not doing great. let alone you say to an employer you now have to contribute an extra two and a half percent for each employee that would a break some businesses and then you tell employees you need to contribute you know like it would just it's a sliding scale it's a gradual yeah where we're easy it's an on-ramp the frustrating with thing with gradual implementation is that you could get someone else that comes into power and completely overturns it in the meantime A troop. Oh, God. And this is the problem with politics. I'm starting to get on Team China, honestly. Never thought I'd say that.

15:02But the idea that they make decisions for 100 years and they actually have to, I mean, obviously, very controversial with who's in power. And if you have a total nightmare, then that's a disaster. But so difficult to bring about change when you're in for four years.

15:17Vic: So hard. So if doesn't actually want a dictatorship, she's just been. No, sorry. Thank you for clarifying. I don't. I just, I think it's when you're in positions when there's so much debt in countries and you have to make hard decisions and you can't please everyone. It's so difficult to be a democracy and to also do the thing that's hard that people aren't going to vote for. You know, it's really difficult. and also this is exactly the same as why we you know love investing in founder-led businesses or like people that have skin in the game it's like because they do think that long term you know they aren't like politicians that come in when we're you know like a ceo that comes in for a couple years brings about change for that period of time someone else comes you know like having that long term view it's you can't bring about significant change in a short period of time like you do need to have that long-term view.

16:11Vic: And that's why when you get the same parties coming in and they're really strong and they come in again and again and again, you do see improvements in economies. Got to be patient. Good things take time. Exactly. Patience, patience, patience. Okay, let's move on. Oh, my God, I was about to call you Luke. Let's move on to labour, Victoria. Babe, let's move on. I did that to my dad when he was over. No, what did you do? I was just kind of like, I think we, I don't know what we were doing. I think we were walking out the door or something. And I was like, babe, can you, dad. Oh, it's disgusting.

16:46No.

16:47Vic: And I was like, oh my gosh, oh my gosh. Thankfully, he's slightly deaf. My dad, okay, this is so, I don't know how people are going to feel about this. Oh, what? Oh my God. Yeah, I know. So dad, bless him. God, I love my dad. So he's quite pet namey with his wife. Like pumpkin, sweetheart. There's an occasional baby comes around a bit. Oh, that's weird when older people do that. Yeah, and look, it's an accident, but he'll sometimes have a slip of the tongue and I'll get like a baby and I'm like, I'm going to just spit the vomit out that's currently sitting in my mouth. Like it's not okay. And someone in the street hears and you're like, oh, no, this is dad, this is dad, this is dad.

17:34It's my dad. Oh, gosh. Okay, back to politics. Okay, so Labor. So what are the employer contributions and how are they differing from national?

17:44Vic: So Labor is, their policy is that employer contributions become compulsory, rising from three and a half to six percent. And there's a few caveats in there as well. but effectively the employers are going to be paying more than the employees or the employees can kind of keep their contributions at a certain threshold, but the employers have to increase over time. So they're putting more onus on the employers. So are they trying to get to 12 % as well? No, 6%. 6%, right. Yeah. Oh, shit. Wait, sorry. Can I just clarify? So their contributions will become like employer contributions. They have to contribute 6 % regardless if the individual opts out or has nothing going in.

18:31Vic: So there's a compulsory. They're fighting for compulsory KiwiSaver and increasing to 6%. Sorry. So businesses at the moment, it's not compulsory for any businesses to do anything. If the employee contributes, the employer has to contribute. But only then. That's so bad. Yeah. So at the moment, if someone opts out because they don't understand, the employer does not have to contribute. Yeah. So when you opt out and you're like, cool, I want to save my 3.5%, I want it to come directly into my bank account because I need the money, just remember you're also forgoing another 3.5%. That's so bad, isn't it?

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20:56So nearly 100 % free for six months. I hope that you realize how amazing this is. Just use the link in the podcast show notes, and remember terms and conditions do apply. Big thank you to Xero for supporting this episode of the Curve Weekly. Should we just talk about the common ground or the similarities between those two major parties for a second? Because am I right in thinking that both are planning on extending employer contributions to over 65? Can we talk about that?

21:29Vic: Yes, common ground is that both National and Labour want to extend employer contributions to when people are over 65. Because right now when you're 65, your employer has no obligation to keep contributing. You still can, but you can also take your money out. Your Kiwis have money because you're technically retired. I think by the time that we get to near that age, it'll be like 80 before we can actually. But also 65's so young. It's so young. Honestly, 65, I reckon I'd feel like a spring chicken. Yeah. Got much of my life to go, perhaps half of it. I think it depends what kind of job you do for your life though, right?

22:08Vic: Like if you're doing skilled labor, you know, or like you're doing something that is actually physical for that long, it can, you probably feel a lot more 65 than someone sitting in an office chair. This is very true. Anyway, both of them, national and labor, are also both wanting government contributions to people on paid parental leave. So right now, if you decide to have children and you take some paternity leave, the government level of parental leave, you don't get any KiwiSaver contributions. So what both Labour and National are wanting to introduce is that there is KiwiSaver contributions on top of that paid by the government, which is so great.

22:51Can we give a working example? I'm about to give birth to triplets. You're going to take six months off.

22:59Vic: Yep. And your employer, unfortunately, cannot pay anything. So you have to, the amount that you're going to get is just the government standard statutory amount. So therefore, you just get paid a certain amount into your bank account, but there's no KiwiSaver contributions on that because your employer's not paying you anything. So the government's saying, we're going to step in and we're going to actually keep contributing to your KiwiSaver while you're getting paid the government statutory contribution. parental leave amount. So basically what this is going to do, and I think we should talk about this in a bit more detail to give context as to why it's such a massive and amazing policy from both parties, is the main thing that creates the gender wealth gap, one of the big contributors, and one of the reasons that we see these terrifying stats around women having nearly half the amount of retirement savings of men when they get to that age, often is due to this time where people take career breaks and aren't earning because they're looking after kids not only are they not getting salaries but they're not contributing to the KiwiSaver and so if someone's going to work to an office and earning money and they continue to contribute this is actually not really that gendered if you were in a same-sex couple and someone was still going to the office and earning and contributing to their KiwiSaver that's where that imbalance comes from and so Vic I don't know if you want to add anything more on this but it's it's pretty huge actually that this is because I think the main issue is that because so many people don't realize how much the compounding returns impact their long-term wealth it's not often a consideration it's amazing that the government is stepping in to do it because I mean they're kind of saying this imbalance the gender wealth equality gap is really an issue and we need to front up and pay people that are on maternity leave but don't kiss their ass too much like come on like Like give women that have just given birth more than 26 weeks leave.

25:02Vic: Give them a higher amount, whoever takes time off work. You know, it's so pitiful what they get. And also like men get two weeks paternity leave. Like come on, like give them equal amounts of paternity leave. Or make a situation where you can decide as a team, okay, cool. We've got a year between us. You're actually the higher income earner. you should you know like just there's so many other ways no you're so right god you know when you haven't experienced it so you don't realize how bad the problem is there must be so many people listening being like that's not great no i mean it's a good step in the right direction but i'm just like while you're at it move the needle more i was at a dinner party on it was not a dinner party it was a lunch party it was very chilled and there was four of us i was at lunch on sunday with three other people.

25:52One of them is getting six months full paid leave. And he's a guy. And he was saying he feels really guilty taking it. He's like, looks around at his team. He's like, oh, I know how much they're going to be taking on by me taking this time. And he said to them, oh God, I just, I feel really bad taking this time off. And they all were like, no, you've earned this. You've worked here. You work so hard. Like enjoy it. We'll be fine. But I just thought that was kind of an interesting take like he he can legally very easily get access to six months of paid full paid leave as the dad but he feels guilty doing it because it's not the norm yeah

26:30Vic: but like i'm sorry like you expect us to as women to just you know like the reason how we feel uncomfortable about it and i don't know i don't know but like it's probably because it's thinking oh gosh like if i step away like what opportunities promotions well like and we do that without even thinking twice most women like it's you're so right change is always uncomfortable but things are going to stay the same unless we get a little uncomfortable Vic one of the things I would love to talk about is the difference between the NZX the New Zealand stock exchange whether or not it does better or worse under Labour or National because we spoke about this around the US election and it was so interesting that there kind of wasn't a difference actually.

27:15Vic: No difference. Is it the same? Okay. No difference in New Zealand. So why is everybody so concerned? No, look, it honestly feels like the world has kind of paused down here. Everyone's like, oh, you know, we'll wait till after the election before we start spending. So funny you say that. My dad said I'm going to think about whether or not I sell the house until after the election. I'm like, sorry, how quickly are things changing there? Surely not that fast. And I sat next to a lady who has like one of the biggest PR companies in New Zealand. And I was like, oh, how's it going? She was like, oh, she's like, everyone's just pausing until after the election.

27:49Vic: I'm like, why? I don't get it anyway. But yes, in terms of the stock market, which is a representation of the New Zealand economy, there is very little evidence that it does better under National or Labour. I mean, there's slightly higher returns with National, but it's nothing to kind of sing home about. So just so you know, it's right home about, not sing home. But like, love that from you. But sing home sounds better. Let's sing home about. Lastly, before we wrap up, I would love to touch on both of our favorite topic, which is tax. Tax. Right. So let's talk about the different adjustments, what's going to happen depending on who's in power.

28:30And maybe let's focus mainly on national and labor.

28:33Vic: So the biggest change is labor is wanting to introduce a capital gains tax of 28 % on investment, rental and commercial properties. that's not ideal but only after 2027 so look i and so your family home's exempt shares are exempt kiwi savvy's exempt uh look i think the property market here is already feeling quite slumpy so i think uh it could just exacerbate the issue but i do think we need to come into line with the rest of the world yeah yeah yeah you know and it's like well it's not great and yes it's going to impact people it's kind of like we just need to grow up a little bit and i actually kind of agree with you i think as long as it's not capital gains on the family home i think if you are making a profit then maybe you should be taxed on it and 28 it's not ridiculous but it's so hard to bring in taxes when you are wanting to win votes, right?

29:34Vic: Because just that policy alone, you've now probably cut out. Most people that own investment properties, they're like not going to vote Labour. So yeah, really hard. Yeah, so I think there's going to be some big changes in KiwiSaver, but in terms of your portfolio, your investments, don't worry too much. It's not like we're going to see big, big swings in the stock market because of the election or the outcome of the election. yeah I mean this election why you should care is because of KiwiSaver and you know there's probably going to be whether it's Labour or National gets in or you know a coalition so like a group of group of parties like everyone has KiwiSaver on their agenda so there is probably going to be changes which once we actually know who's in power we can circle back and kind of dig in a bit more deeper into to what is happening in New Zealand once we know who's in power.

30:25Thank you so much Vic and if anyone does have any questions specifically on the financial policies, feel free to let us know. If anything didn't make sense, we want to make sure everyone's feeling nice and educated ahead of the election. But, yeah, that's it from us on politics. Can't say we'll be back anytime soon.

30:42Vic: I reckon next election we get all the heads of the parties on. That's fun. And we do a Curve podcast debate. Oh, my gosh. We'd be like, shush, Susan. It's not your turn. It's David's. Or we just kind of like let them all argue on the podcast, you know. It's like you just throw the bait in. That is such a good idea. Just a little round table. Love that. Yeah. Okay. See you in four years for that episode. Oh my God. Shit, that's a while away. Thank you so much for listening to this episode of The Curve. Feel free to leave a comment to let us know what you thought. We always love hearing your feedback.

31:15New episodes are out Monday, Wednesday, and Friday. So make sure you're subscribed to be notified whenever a new episode drops. In the meantime, we're around on socials so you can find all the links in the show notes. Hope you have a great week and we will see you for the next episode. okay quickly the curve was created to empower and educate you about investing but we are not

31:33Vic: financial advisors our platform exists for educational purposes only and it doesn't provide personalized investing advice for your individual needs and should not be relied upon to make an investment or financial decision and always remember to do your own research before making any investment or financial decision we're here for any knowledge and support you need but the final call is always yours and thanks for being here you got this yeah we know you got this