KiwiSaver for kids?

The Greens announced:

The Green Party will deliver Kiwi kids a more financially secure future, while reducing inequality, by introducing a national savings scheme for all New Zealand children.

The Green Party announced a pre-Budget savings policy today, called Kids’ KiwiSaver, which will provide all newborns a kick-start deposit of $1,000, on-going top-up contributions, and matching savings incentives to assist families to save for their children’s future.

With careful saving, most children could reasonably build a nest egg of $12,900 by the age of 18 that they can then use for either tertiary education, a deposit on a first home, or roll over into an adult KiwiSaver account for their retirement. The scheme was fully costed by Infometrics and will cost $224 million over the first three years of operation.

The initial cost is not what is important, but the full annual cost once implemented. This is $248 million a year. That has to be funded, which means increasing taxation, or not spending the money elsewhere.

Is giving 18 year olds a “free” $13,000 they haven’t earned the best use of taxpayer money?

The full benefits of this policy would only be reached in 2037, during which time $1.4 billion net present value would have been spent. Would we get a better return investing that instead in better schools?