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How about this for an idea?  

Instead of the tax people pay on the first $60,000 of their income going to the government, what if it went into a savings account to pay for healthcare and put food on the table when they retire?  

It’s an idea being pushed by former finance minister Sir Roger Douglas and University of Auckland economics professor Robert MacCulloch which, they say, is needed because of the ageing population.  

They reckon people could save as much as $21,000 a year, with some of the money going into a health account, some going into a superannuation account, and the rest going into a “rainy day” account.   

There are some bits about this that really I like, and I’m not so sure about other aspects.  

The thing I like most is that —for pretty much the first-time ever— we would have tax money ringfenced for specific things.  

Whether we can describe it as tax money I’m not sure, because it would be money not going to the government but going into these individual bank accounts instead. But we’ll call it tax money.  

Sir Roger and Professor MacCulloch have done the numbers and they reckon that —if the government didn’t get its hands on the tax money from the first $60,000 of everyone’s income— on average, people would end up with just over $20,000 in their account each year. 

Breaking that down, they say we’d have about $9,500 going into the health bucket, just under $7,400 going into the superannuation bucket, and $4,200 going into the “rainy day” bucket. That’s each year – providing you’re working, of course.  

So I like it for the ring-fencing and how we would know exactly how much we have up our sleeve.   

And if you do the numbers over the course of someone’s total working life —that’s assuming that they start work at 20 and stop working at 65— the average person that Sir Roger is basing his numbers on could have about $950,000 in their account.  

That’s without interest being factored in. So they could retire with more than $1 million in the bank to pay for healthcare and to live off.  

And if you’re thinking we’ve got KiwiSaver, so why would we need this extra savings account? If you’re thinking that, chances are you’re well-off enough to afford KiwiSaver.  

Because Professor MacCulloch is saying today that many low-income earners just can’t afford KiwiSaver and they would benefit big-time if most of their tax actually went into a savings account. Which makes sense to me.  

Dig a little deeper though and Sir Roger Douglas’ old ACT Party ideals start to come through, with him saying today that this approach would give people the freedom to choose whether they get medical treatment, for example, in the public sector or the private sector.  

But what if every Tom, Dick, and Harry had all this money and decided to get their hips done privately? That would be boom times for the private hospitals, but what would it mean for the public hospitals?  

Possibly less government investment.  

And what if a model like this was adopted and we had politicians down the track letting people use the money in these dedicated accounts to pay for first-home deposits and all that carry-on? Which has happened with KiwiSaver.  

Sir Roger says he’s been banging on for ages about what he and Professor MacCulloch are calling an “economic car crash”.  

They say governments over the years have chosen to ignore the looming health and welfare crisis that we’re heading into, if we haven’t reached that point already.  

At the root of it is the ageing population. And they’re saying today that we just can’t keep on keeping on the way we have and the way we are.  

And I agree with them. Which is why —even though I’ve got some misgivings about the impact this could have on things like government investment in the healthcare system— overall, I think it’s a brilliant idea.