Ardern says National's proposed KiwiSaver withdrawals for business start-ups would 'undermine retirement savings'

Source: 1News

Prime Minister Jacinda Ardern says she doesn’t back National’s proposal to allow KiwiSaver withdrawals for business start-ups.

If elected at the upcoming election, National says it wants to help entrepreneurs starting out by allowing them to withdraw up to $20,000 from their KiwiSaver to get their businesses off the ground.

National leader Judith Collins asked Ms Ardern if she backed the proposal in question time this afternoon.

The Prime Minister answered by listing all the ways her Government helps support small businesses before addressing the question directly.

"I do have concerns however around the proposal the member has mentioned which will undermine New Zealanders' retirement savings and I also have concerns that the policy the member has put forward is as yet un-costed."

Ms Collins then used a real-world example for her follow-up question.

"Is there anything wrong with a builder who has lost his job because of Covid-19 being able to use up to $20,000 of his own KiwiSaver to put towards a van and some new tools so he can start his own building business?"

Ms Ardern answered with other options available to those who want to start a new business in New Zealand.

"My advice would be to anyone who finds themselves currently unemployed and wishes to start their own business if you think that you need to gamble with your retirement savings.

"Instead through the Ministry of Social Development someone can access the flexi-wage subsidy to start their own business and to support themselves as a self-employed person they can also access through MSD a business start-up fund that can give them up to $10,000."

Later in the exchange Ms Collins pointed out that KiwiSaver can be accessed in times of hardship and to purchase a house, so why shouldn't it be accesed to start a business for someone experiencing hardship?

Ms Ardern answered that houses are a less risky investment than a business, where two-thirds of start-ups fail within a two year period.

She also stated it could lead to more hardship for someone if they lose their retirement fund in a failed business.

The line of questioning comes after, National Party leader Judith Collins announced the BusinessStart policy in Lower Hutt this morning.

Under BusinessStart, National aims to support Kiwis who have lost their job since March 1, as well as those who lose their jobs in the months ahead.

They will get a $1000 voucher for them to get proper financial advice from a chartered accountant or registered financial adviser on their ideas and put together a viable business plan, she said.

Once those business plans are signed off, BusinessStart recipients can access up to $20,000 of their own money from their KiwiSaver account to help get their business going.

"It’s your money that you’ve put aside for a rainy day. Well, if you’ve lost your job, it’s not raining, it’s pouring," Ms Collins said.

"A lot of that KiwiSaver money is sitting in default funds. Another big chunk of it is held in foreign shares. National says it may be more valuable to you invested in your own business. It’s your choice whether to leave it with the fund managers or invest it yourself."

As well, they can access at least $10,000 in tax credits to pay GST or provisional tax when the business starts making a profit, a waiver from the Company Office registration fee of $130, and free mentoring from advisers like chambers of commerce, employers and manufacturers associations and Business Mentors New Zealand from a new $10 million contestable fund.