Monday, March 28, 2005

Courting the Grey Vote??

DPF has written on the recent pledge by New Zealand First (NZF) to increase the superannuation rate from 65% of the average wage to 72.5%. It isn't often that I find myslf sharing an opinion with DPF, but on this case I also believe that the promise is irresponsible.

After decades of partisan wrangling over NZ Superannuation, we at last seemed to have arrived at a reasonably broad political and public consensus around it's future. After the mess of the 90s during which National cut Super to 60% of the average wage , and the National/NZF coalition blew the accord out of the water with the 1997 referendum, it has taken another half decade to rebuild the foundations of a Super consensus which are:

- 65% at 65 years of age
- universal coverage
- pre-funding through the Cullen fund.

Peters' proposal threatens to blow the consensus out of the water and re-politicise this crucial policy area. The costs of 72.5% will be astronomical, particularly given the impending bulge of baby-boomers, and he has failed to state just where the money will come from - cuts to other baseline expenditure, reduced funding for essential capital projects (roads etc...), or higher taxes??? There's an old saying about money and trees.

Whatsmore, I actually rate elderly voters more than Mr Peters apparently does. They know a bribe when they see it and I believe most will think of more than just their own hip pockets on polling day.


Nigel Kearney said...

The 65% promise is not responsible either - the Cullen fund will not pay more than 15% of the cost. Anyone under 50 should expect nothing from the government when they retire.

Unfortunately Labour is doing just the same as NZ First by making short-term vote seeking promises that they know cannot be delivered on.

The 65% rate will have to be lowered, or the age increased, by whichever party is in power when the money runs out.

Anonymous said...

I think Nigel is being unduly pessimistic.

To the 15% figure he claims for the Cullen fund should be added the amount spent on National Superannuation in the Budget now and which will keep on rolling forward. My understanding is that the two taken together will comprise something like 90% of the anticipated cost of National Superannuation.

A growing economy and a more productive workforce - not least the increasing porportions of those aged 65 who will continue to work in 'semi-retirement' and pay tax - can take care of the rest and give us confidence for the future of National Suerpannuation on the current basis.

michael wood said...

This is quite correct. Pre-funding has never been presented as a way to fully fund Super in the future, simply as a way to get us over the 'hump' of a lot of baby boomers retiring at once. That's why it builds up, and then runds down as that generation... well, dies!!!

Graham watson said...

72.5 % is quite achievable, the current level being inadequate by a heartless govt swimming in a large surplus of dosh it has taken from hard working people.

Just ensure it is not universal, ie goes to those who need it and consider raising the age with moves in life expectancy and relative levels of health.

spooks said...

"Pre-funding has never been presented as a way to fully fund Super in the future"
Unfortunately, you get politicians and would-by pollies, who repeatedly tell only the jilted version, over and over, Labour bing the masters of spin, manipulation of the facts. Exactly as it has been done in this blog. "pre-funding" and "partial pre-funding" are not one and the same.