The Minister of Finance has released his much-anticipated National Infrastructure Plan. Generally I’m averse to plans putting the decisions of consumers and businesses into straight-jackets on the whims of politicians, however, the plan itself appears sound: invest in key infrastructure areas such as fibre to the home, roads of “national significance”, schools, hospitals and prisons. These things that lead to long-term sustained economic growth, not random and hard to administer tax breaks and subsidies.

However, as is a usual theme for this government, it seems like one good idea – Public-Private Partnerships or PPPs, will not be utilised. As FCK has long stressed,  the government is spending beyond New Zealand’s means. This situation cannot last forever – either the economy has to grow much faster than government spending, or government spending has to be cut so economic growth can catch up. This means unless we slash welfare spending or strike oil, a big spend up on infrastructure isn’t feasible.

This is where PPPs come in. While lefties moan that PPPs represent “privatization by stealth” and ensure returns go to private investors, the reality is that they ensure infrastructure is built sooner (thus enabling economic activity to grow faster than before) and reduce the taxpayer’s exposure and expenditure. The government’s cautious approach to PPPs and its desire to spend up large on infrastructure make the task all the more harder, and expensive, for taxpayers.

Meanwhile, Tower Investments want PPPs to be made available to KiwiSaver investors. Now there’s an innovative idea – all the silly nonsense that infrastructure will end up in the hands of foreigners would be quickly forgotten, as only New Zealanders can invest in KiwiSaver. According to KiwiSaver’s own website, $930 million has been deposited in the scheme between 2009 – 2010.

1. Is, apparently, encouraging saving

I was very cynical about this when KiwiSaver was launched. Only just the other week I speculated that it might have killed our already low rate of savings. However, the National Business Review reported yesterday that a survey by Colmar Brunton in August showed that 64% of people currently saving are also saving for their retirement, up from 58% in February this year, back to the high of 65% reached in February 2008, just before the recession struck. There’s a trend building:

2. John “Minto Bar” Minto hates it:

“Kiwisaver began the privatisation of government superannuation. It gives the biggest benefits to those on the highest incomes while reducing government responsibility to provide retirement income through taxation.”

All excellent reasons to support KiwiSaver: privatisation, rewards those who earn more and therefore rewards hard work, reducing government expenditure (well, only if the government had the balls to introduce means-testing for superannuation or raise the retirement age) and dependence. And pissing off an old socialist is such fun.

With time I also think the Government could phase out the incentives for joining KiwiSaver as the 2025 report suggests, as eventually they will start to actually hurt saving. It doesn’t make much sense to tax people then churn their money back to them in the form of savings incentives.

3. Encourages a culture of saving and investment:

Ok, anecdotal evidence only – from KiwiBlog the other day:

…what struck me, was the difference it has made at an individual level. I can’t imagine before KiwiSaver, three young women (who still have massive student debt) would be talking about their investments, who is getting the best rate of return etc. Developing that culture of savings and investment literacy at an early age is possibly KiwiSaver’s greatest claim to fame.

So, I’m a convert – KiwiSaver provides a means to privatise superannuation and encourage savings and investment. And it pisses off socialists like John Minto.