MICHAEL SMYTHE AGAINST NZ HERALD

Overview

1. The New Zealand Herald published an online article on August 30, 2022, headlined Government quietly introduces $103 billion tax on KiwiSaver. The same article appeared in the paper’s print edition the following day. A follow-up story published on September 1, 2022, was headlined Embarrassment over Labour’s backdown on savings ‘stealth’ tax.
2. Michael Smythe complained that the Herald’s journalism was inaccurate and that there had been poor editorial oversight.
3.  He said the first article stated Government planned to charge GST on managed and KiwiSaver funds while the second article stated the tax was not a tax directly on KiwiSaver funds. The Herald quoted inflammatory exaggerations from vested interests to score a political point. Rather than delivering balanced journalism the Herald prioritised inaccuracy to attract attention.
4.  “I believe most readers of the Wednesday (the first) article would have been left with the impression that GST was to be applied to the whole of the KiwiSaver funds and that directly caused the backlash that made the Government withdraw the policy. In fact, the Herald editor boasted about causing the U-turn in his first email (to) me.”
5. Mr Smyth also complained that the Herald chose not to publish a letter from him on its reporting of the tax story.
6. The New Zealand Herald’s Editor Murray Kirkness said the first article made it clear that GST would be imposed on the fees charged by those who administer managed funds and KiwiSaver Funds. The second article explained that GST would not be applied to KiwiSaver balances, but because the increase in fees would be passed on this would lead to a reduction in such balances.
7. “They’re both saying the same thing – individual KiwiSavers’ balances will not be taxed but those balances will reduce when the GST on fees is passed on to each KiwiSaver.
8. “That’s not dancing on the head of a pin, that’s explaining to readers what impact the proposed GST on fees would do to their retirement savings, as modelled by the FMA.”
9. The Media Council does not accept the argument that the reporting was inaccurate. The first article clearly stated that Government stood to gain extra revenue from new rules which would lift GST on fees for managed funds and KiwiSaver to the standard rate of 15 percent.  This was not wrong.  GST is a form of tax, and it was made clear that it was a tax on the fees payable.  That was accurately reported as being ultimately payable by those with Kiwi Saver funds.
10. The follow-up story, which reported the Government’s backdown on the policy, spelt it out further by explicitly stating that it was not a tax directly on KiwiSaver Funds, but it would come from funds nevertheless. These statements are not contradictory.
11. The Council notes the Herald reporting was straightforward, correct and carefully explained to readers. People may have misunderstood it but that doesn’t make the reporting wrong. The fact that the Government backed down when the Herald revealed the impact of a new tax rule was not to the discredit of the Herald.
12. Although the complainant did not refer to the headline specifically, the Council is aware that there was some backlash to the effect that the headline in quoting a $103 billion tax on KiwiSaver was wrong. However, the figure showed the compounded losses over the years, and stated “Modelling from the Financial Markets Authority (FMA) warns the tax and its compounding effects will dent KiwiSaver balances by $103 billion by 2070”. Therefore, the key message was correct, showing the compounding effects on Kiwi Saver balances, and an important element of the story was reflected in the headline.  There was no breach of principle 6. As for the letter to the editor – publication of that was a matter for the editor’s discretion.

Decision: There were insufficient grounds to proceed.