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Photo: RNZ \/ Mark Papalii\n<\/p>\n
The ACT Party leader David Seymour has floated dishing out $500 to every year 11 student for an investment account, to promote investing at a younger age.<\/p>\n
It was not an ACT policy “yet”, he said.<\/p>\n
Seymour said the idea could be funded by taking about five percent, or $30 million, of the $600 million annual KiwiSaver subsidy – the government’s $260 contribution to people’s KiwiSaver accounts.<\/p>\n
“I think most people would say that’s a bargain,” he said.<\/p>\n
“For a relatively modest amount of money, we could give a generation a practical introduction to saving, investing, ownership, and financial responsibility.”<\/p>\n
Using actual money, rather than a simulator, means students have “skin in the game” and would be more motivated, Seymour said.<\/p>\n
The cash would be accompanied by education, including assessments each term, but it was still unclear who might teach it, he said.<\/p>\n
Seymour told Checkpoint this was the reason he was floating this as an idea rather than a complete policy.<\/p>\n
It could perhaps be a hybrid of online learning, people from the community and homeroom teachers, he said.<\/p>\n
“It needn’t take up a huge amount of time but it will get children’s attention and that’s why it has to have real money and real skin in the game, because they have to really want it.”<\/p>\n
He told Checkpoint this idea would solve a few problems.<\/p>\n
“Most people would agree we’re too into housing compared with productive investment, we have a problem with productivity and wage growth, which manifests itself as concern about the cost of living, and we also I think have a bit of a problem with financial literacy, or at least we could certainly do better on that.”<\/p>\n
It was a shot at improving people’s financial literacy.<\/p>\n
“Too many young New Zealanders leave school without even a basic understanding of how wealth is created, how capital grows, or how businesses generate value,” Seymour said.<\/p>\n
“Changing that requires a change in how the next generation thinks about business and investment. Bluntly, I do not think our current education system is set up to teach this.”<\/p>\n
The idea would directly address the country’s poor productivity, he said.<\/p>\n
“A generation of savvy, financially literate young Kiwis will increase productivity more drastically than almost anything else.”<\/p>\n
It was education rather than a hand out, and people would not be able to take the money and run because there would be controls on the accounts, he said.<\/p>\n
Seymour said he would be asking people to give up about $25 per year in order to help the next generation.<\/p>\n
“At the moment you get about $500, if it was to become $475, but you knew you were living in a country where the young people, the next generation, had a new appreciation of the value of saving and investing, and that the whole country was going to be wealthier as a result of that shift, I think you could probably forgive the effectively $25 a year.”<\/p>\n
How it would work<\/p>\n
Seymour suggested the process could be supported by platforms like Sharesies or BlackBull, and each student’s investments would progress each term after passing assessments.<\/p>\n
In term one they’d choose a term deposit: “a safe investment, but one that introduces the basic idea of storing capital,” Seymour said.<\/p>\n
In term two, they would invest in a managed fund to learn about risk, and in term three they could invest in New Zealand equities before moving to global assets in term four.<\/p>\n
There were a few options from there, like putting the money directly into a student’s KiwiSaver, adding it as credit to a student loan, or keeping the gains they make above the original $500, in cash.<\/p>\n
If they don’t pass the assessments: “you’ve got to keep your money in a term deposit, and the returns won’t be great, but at least you’re safe.”<\/p>\n
On Thursday evening Seymour presented the idea to a business crowd at an ANZ event in Christchurch.<\/p>\n