Power and ideas: The development of retirement savings taxation in Australasia

New Zealand and Australia have adopted vastly different approaches to retirement savings and its associated taxation. Two fundamental differences exist: New Zealand offers little in the way of tax incentives for retirement savings and there is no compulsion for retirement savings; Australia provides highly concessionary tax incentives and has a mandatory occupational retirement savings scheme. This paper uses a historical institutionalism theoretical framework to investigate the events that led to these diverse approaches in retirement savings taxation between two countries that frequently adopt similar policy ‘solutions’.The research highlights the importance of power and ideas in the policy development process. Power imbalances among institutions and individuals facilitated the pursuit of tax and retirement savings policy arrangements that were aligned with the world view of privileged elites. Ideas justified the policy direction adopted in each country and assisted in legitimising the power granted to actors and institutions that supported the prevailing ideology. The strongest ideas were found in New Zealand, where reform was the most radical.