A meaningful discussion about the future of universal superannuation in New Zealand is long overdue, but the National Party is adamant that kicking the Super can down the road is the best way of avoiding it.
“A political hot potato that no party wants to handle.” That’s how The Nation’s Lisa Owen last week described rising superannuation costs, and she’s almost right. Since Andrew Little last year abandoned Labour’s policy of raising the age of eligibility, ACT is the one party campaigning on sustainable super.
Now perhaps that may be sort of correct. In past terms of the current Government Peter Dunne campaigned for changes to Super, promoting ‘flex-super’ which is still a United Future policy.
Politicians across the spectrum, including the Prime Minister, treat changes to super like a poison pill for how it polls with older voters. But if this Government doesn’t make changes, a future one will. By denying this, politicians deny younger Kiwis the chance to even discuss the issue. They are showing contempt for younger voters.
It is often framed as an ‘appeasing older voters’ versus addressing issues that younger peeople will face in the future.
No-one wants to punish today’s retirees or near-retirees. The question is how super should work in the decades ahead. In the long term, policy change appears inevitable – we’re healthier, working and living longer, resulting in a rapidly aging population. This trend won’t stop – half of babies born today are expected to live until the age of 100, and in my lifetime we’ll go from five taxpayers per superannuitant to two taxpayers per superannuitant.
The effects of this huge demographic shift can’t be overstated, with its effect on super alone costing an extra billion dollars each year. It’s reasonable to assume taxpayers won’t tolerate this forever, and fair enough.
When asked about the problem, politicians gloss over the real scale of the cost and instead pivot onto smaller issues. A typical tactic is to focus on immigrants, who can receive the pension after just 10 years of residency. This period should be extended, but that would be just a drop in the bucket compared to the cost of super for the existing ageing population.
Another idea mentioned is flexi-super – letting some people take it earlier at a lower rate, or later at a higher rate. It’s a good idea, but ultimately doesn’t affect the policy’s cost. It needs to come with more substantial reform.
Some suggest means-testing – taking super away from retirees with high earnings. But it’s surely both unwise and unfair to punish those who choose to continue working and pay taxes.
So that brings us back to raising the age.
That’s something that National won’t consider, and I presume NZ First won’t either.
I agree with you David, on most counts.
Where I disagree is with David’s interpretation of other parties position on this question – namely ours. Labour knows we have a problem and we knew it when Michael Cullen set up the Super fund. We knew it when we campaigned to raise the age of superannuation, not just one election, but two. That may have been rejected by voters, but we can’t give up on the conversation on how to guarantee universal super for everyone. That has to be our bottom line.
So yes, you’re right. The National Government has rejected taking action in this area, and they are wrong.
But Seymour points out:
The Prime Minister promised in 2008 not to make changes under his leadership.
Not only that, Key and Bill English refuse to consider planning for the future affordability of Super.
If they get back in for another term that’s another three years of inaction, unless ACT and/or Dunne hold the deciding votes and force National to do something.
If NZ First hold the balance of power then no change will be locked in, whether Labour or National lead the next government.
Perhaps the courage we are now asking for needs to come from us, but also from voters – we need them to start banging down a few doors too.
It doesn’t seem to be an issue that voters will decide elections on.
A meaningful discussion about the future of universal superannuation is needed but is unlikely to happen in this decade.