Seymour Super pressure on Key

David Seymour continues to pressure John Key on the future of Superannuation in New Zealand, this time via Question Time in Parliament yesterday.

This is one way of differentiating ACT from National, on an issue that is of concern to many, the affordability of an escalating Super cost.

Seymour: “Does the Prime Minister plan to still be in office in the 2020s when the cost of superannuation to New Zealand taxpayers rises by $1.5 billion every year?”

Key has promised to resign rather than change New Zealand’s superannuation.

This continues a campaign from Seymour. In February in NBR ACT wants referendum on Super:

ACT Leader David Seymour is challenging other parties to support a binding referendum to determine the future of New Zealand’s superannuation system.

“This is smart politics, maybe a bit too smart,” says NBR political editor Rob Hosking.

“It makes John Key’s policy of not lifting the age above 65 — when every other country with a state pension is doing just that — look like the gutless dodge it is,” Hosking says.

“But it also gives Key an out, if a referendum votes on raising the age. If that happens, it will be good for the country.”

Seymour:

“If the public can vote on the New Zealand flag, a matter that is largely symbolic, why not follow the same process for another intractable problem, one that politicians have been dodging for decades,” Mr Seymour says.

“It is vital that we ensure NZ Superannuation is viable over the longer term, avoiding undue fiscal stress and pressure on tax rates, and achieving fairness across generations.”

Three weeks ago (at Stuff):

ACT is trying to get the other political parties to agree to a referendum on the future of NZ Super, which the party says is unsustainable in the face of an ageing population .

ANZ’s retirement calculator suggests that to live decently in retirement, a person would need to save about $622,000 in the absence of NZ Super.

An ACT/Seymour press release on budget day two weeks ago:

National’s Budget ignores elephant in the room

The Budget’s focus is too short-term and ignores intergenerational issues, says ACT Leader David Seymour.

“National is denying the demographic realities behind rising Superannuation costs,” said Mr Seymour.

“New Zealanders are living longer than ever, a trend which won’t go away any time soon. As life expectancy rises by about a year each decade it would be fair to raise the age of eligibility for Super by about the same.

“Otherwise, today’s young people will be forced to fund NZ Super through higher and higher taxes, with no guarantee of receiving the same benefits when needed.

“The longer we wait the more drastic will be the inevitable adjustment. We must recognise the need for more intergenerational fairness.”

And yesterday Seymour questioned Key about the affordability of Super in Question Time in Parliament.

Prime Minister—Statements on Superannuation

7. DAVID SEYMOUR (Leader—ACT) to the Prime Minister : Does he stand by his statement in the House last week that because New Zealand Superannuation costs are currently less than 5 percent of GDP, and are forecast to rise to 8 percent of GDP by 2060, this represents a responsible path for overall Government spending?

Rt Hon JOHN KEY (Prime Minister): I stand by my statement, which was “We have set out a responsible path for overall Government spending so that current settings for New Zealand superannuation are both affordable and fully factored into our long-term forecast.” That is true, as the Budget shows. Other parties in this House from time to time want to cut back on superannuation entitlements, while other people want to spend the money on something else. That is a fiscal choice they should put clearly to the electorate, including Andrew Little and his idea of means testing.

David Seymour : Does it not strike the Prime Minister as odd that he is commending OECD fiscal arrangements, given that countries like France, Greece, Italy, Portugal, and Spain are all facing a brutal fiscal adjustment that means pushing up the age of eligibility for pensions, increasing pension contribution rates, and shifting indexation from a wage to an inflation basis? Is that the future we are offering younger New Zealanders?

Rt Hon JOHN KEY : No, I think it is about correctly reflecting, actually, on the current position, which is that New Zealand superannuation currently costs 4.8 percent of GDP and is expected to rise to 8 percent of GDP by 2050. At the moment, the OECD average today is 9.5 percent and is expected to rise to 11 .7 percent. So, yes, although the costs of New Zealand superannuation will rise, I think it is affordable and within our projected forecast.

David Seymour : Does the Prime Minister plan to still be in office in the 2020s when the cost of superannuation to New Zealand taxpayers rises by $1.5 billion every year?

Rt Hon JOHN KEY : I certainly hope so, but of course there will be many elections to run on, and I look forward to working with the member for as long as he is the member for Epsom, which is where I live.

Expect Seymour to keep nagging away at Key and National over Super.

Surely the escalating cost of Super is worth a flag scale national discussion and referendum.

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7 Comments

  1. David

     /  3rd June 2015

    I think Key is on the right side of public opinion and once again the media are wrong, the NZ Super will peak at just over 8% of GDP which is pretty much the level in every developed nation has reached NOW and countries like Germany are looking at just north of 12% of GDP for their peak.
    NZ difference is Roger Douglas and then Ruth Richardson reformed the super schemes for state employees where as other nations have guaranteed index linked pensions based on final salary with little or no contribution from the employee. (see Greece where a hairdresser can retire at 55 on full state pension or the Italian P.A. who has worked in their parliament for 30 years and retired at 54 on an index linked pension of 264k a year).NZ has been quite smart in having a very simple and cheap to run system, the only people who say its unsustainable are purists and journos who can use it to have a crack at Key.

    Reply
    • Alan Wilkinson

       /  3rd June 2015

      Well said, David. You might add that virtually the last people who would be able to figure out whether NZ Super is affordable would be said innumerate journalists – arts and politics graduates all.

      In attempting these forecasts the unknowns exceed the estimates of variance, a major one being how much of increased life expectancy will be spent in productive work.

      Reply
    • Goldie

       /  3rd June 2015

      I am not sure that comparisons with the OECD average at the moment are relevant. The problem is that life expectancy is rising (i.e. people aged 65 now have on average 20 years ahead of them, whereas people aged 65 in 2050 will have far more than another 20 years ahead of them).
      And it is not just the cost of the Superannuation – the increasing health care costs from an aging population in NZ are borne directly by the State.

      Reply
      • Alan Wilkinson

         /  3rd June 2015

        We are hardly in a position to know what health technology and wealth we will have in another generation or two. Treasury struggles to forecast next year.

        Reply
  2. Don’t underestimate that Seymour is acting as a stalking horse for Key and English here. I suspected a backroom deal has been done to 1) test public opinion by stimulating the debate 2) rebuild ACT’s brand by having David Seymour crusading on this issue and having that fiscal responsibility meme restored to the ACT name – fiscal conservatives are, i personally believe, looking for a home but want to know ACT is viable before committing a party vote..

    Being a smaller government person myself I see self provision of retirement savings as a good thing.

    So I would be broadly supportive of a compulsory Kiwisaver type scheme even though:
    > I don’t trust the funds management industry one little bit
    > there are a number of valid reasons why it might be in someones best interests to invest funds elsewhere e.g. in their own business, or paying down mortgages etc.

    A compulsory super saving scheme coupled with a balancing tax cut would take the money out of politicians hands and shrink the government [hopefully]

    In addition a decent savings pool looking for good investment opportunities would be broadly stimulative of the economy if those invested pursued solid investment strategies… and a broadly growing economy is good for us all. Just keep politicians hands well off it!

    Reply
    • Alan Wilkinson

       /  3rd June 2015

      The world is awash in money looking for productive investments. I’m pretty sure your savings pool will struggle to outperform the rest of the world let alone the alternative uses the owners of this money had for it.

      Reply
      • It is awash at the moment Alan. 10 years from now maybe not. And yes I fully understand and acknowledged in my comment above people may have better uses for their money

        My point if you read the the whole post is I support small government and people saving for their own retirement. I BROADLY support a compulsory retirement scheme to get Government out of peoples lives and so they can save for their retirement… WHY? because NZers as a whole have a bad habit of being a she’ll be right and the Government will provide bunch of people… I see a compulsory retirement scheme as a half way house which gets the government dependence out of the way but ensures people have funds to retire on when the time comes. lots of wrinkles in super policy and nothing is perfect

        Reply

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