National’s Super age proposal

This afternoon Bill English announce National’s superannuation policy, which included a raising of the entitlement age in 20 years time.

There has been a lot of immediate reaction. I think people should think this through and discuss it sensibly.

There are political implications for coalition negotiations but that shouldn’t stop a decent debate without resorting to knee jerk reactions.

This policy won’t affect me as I’ll be on Super long before this takes effect.


Lifting NZ Super age the right thing to do

Progressively lifting the age of entitlement to New Zealand Superannuation from 65 to 67 is the responsible and fair thing to do for New Zealand, Finance Minister Steven Joyce says.

“Average life expectancy is increasing by around 1.3 years each decade and more older people are staying in the workforce,” Mr Joyce says.

“Greater life expectancy is of course positive but it does drive up the cost of NZ Super. While New Zealand has a more affordable scheme than most countries, the increasing costs would require future trade-offs – either restricting spending increases in areas like health and education, or increasing taxes.”

The Government intends to increase the age of entitlement for NZ Super by six months each year from July 2037 until it reaches 67 in July 2040. This means everyone born on or after 1 January 1974 will be eligible for NZ Super from age 67.

Other settings such as indexing NZ Super to the average wage and universal entitlement without means testing will remain unchanged; and the age that KiwiSaver funds can be accessed will remain at 65.

“Making a change over a reasonable timeframe will give future generations of New Zealanders more choice as to how they allocate their government spending,” Mr Joyce says.

“While others have called for an earlier transition, the Government’s view is that giving 20 years’ notice balances timeliness with being fair to current generations of working New Zealanders.”

Average life expectancy in New Zealand has increased by 12 years over the past 60 years, including by four years since 2001, when the age for NZ Super was increased to 65.

“When the age was set at 65 in 2001, a retiree could expect to spend about a fifth of their life receiving NZ Super. That has since increased to around a quarter,” Mr Joyce says. “Following this change, those eligible for NZ Super at 67 in 2040 can still expect to receive it for a quarter of their life on average.”

Mr Joyce says the Government’s previous position of not changing the age of eligibility was appropriate in the aftermath of the Global Financial Crisis, when New Zealanders were looking for certainty at a time when the Government’s finances were under pressure.

The Government is also proposing to double the residency requirements for NZ Super so that applicants must have lived in New Zealand for 20 years, with five of those after the age of 50. People who are already citizens or residents will remain eligible under the existing rules.

The Government intends to introduce legislation to make these changes early in 2018. The residency changes will cover people who arrive in New Zealand after the legislation is passed.

“These changes are important and need to be politically durable,” Mr Joyce says. “Scheduling the legislation in this way gives all political parties the opportunity to discuss their position with the public before it comes before Parliament.”

The proposed changes to the age of eligibility and the residency requirements are estimated to save the Government in excess of 0.6 per cent of GDP or $4.0 billion annually once the changes are fully in place.

Included in the legislation will be provision for parliamentary consideration of any need for any temporary transition requirements in 2030.

“It is not possible yet to determine what, if any, temporary support will be needed for people who are unable to continue working beyond the age of 65,” Mr Joyce says.

“Considering any requirements in 2030 will give a future parliament the opportunity to consider current information on health and labour market trends of different groups as the age change approaches.”

 

Steven Joyce on tax cuts

Finance Minister Steven Joyce has given some indications of Government thinking on tax cuts (in election year).

Stuff: Joyce signals low and middle earners’ top rates target for tax cuts

Finance Minister Steven Joyce has signalled that cutting the top tax rate paid by lower and middle income earners is his top priority for tax cuts.

In a speech to the Auckland Chamber of Commerce on Thursday he said it was still too early to be sure that a surplus will be achieved in the current financial year, particularly given the costs associated with the Kaikoura earthquakes.

Treasury revealed on Thursday  that the books were in surplus by a narrow $9 million in the first six months of the current financial year – almost $700m ahead of forecast.

He was concentrating on four key areas for his first Budget on May 25.

They are:

  • better public services for a growing country,
  • building the infrastructure a growing modern economy needed,
  • paying down debt “as a percentage of gross domestic product”
  • reducing the tax burden “and in particular the impact of marginal tax rates on lower and middle income earners, when we have the room to do so”.

The Government has let bracket creep effectively increase tax rates for all income earners over the past eight years – something Michael Cullen eventually got hammered for by voters in 2008.

One could be a bit cynical about now offering to address this in the first election after John Key’s exit.

Government stalling on housing

Housing has been a major and growing problem for the Government, and their lack of action in trying to stem escalating prices has been one of the biggest legitimate criticisms of them.

And Finance Minister Steven Joyce appears to be stalling further because it is election year.

Stacey Kirk: Facing a firing squad, what’s left to do but stall?

An old advertisement used to run on TV, in which a man facing firing squad asks for a Pixie Caramel as his last request.

In the extended time it takes for him to down that long chew, his shooters fall asleep and he scales a prison wall – evading consequence for as long as he can outrun the inevitable chase that follows.

The man facing firing squad is Finance Minister Steven Joyce, and his Pixie Caramel is a cost-benefit analysis of debt-to-income ratios (DTIs).

That doesn’t look anything like Joyce but you get the picture.

The Reserve Bank wants another clip on its tool belt to apply DTIs – a restriction which would limit how much banks could lend to people, based on their income.

The move is intended to avert a personal debt crisis that could occur if buyers continue to borrow large amounts to get a foothold in a rampant housing market, but become unable to service their debt once interest rates start to rise.

But the collateral damage would likely see a saw cut through the bottom rung of the housing ladder.

Thousands of first home buyers would be priced out of the market, many on incomes where a cap on what they could borrow wouldn’t be able to buy a one-bedroom home in Auckland – a city where $1 million is now the average house price.

“Not in my election year, you don’t,” Finance Minister Steven Joyce has effectively told Reserve Bank Governor Graeme Wheeler.

He has manoeuvred to divert the Reserve Bank from undertaking the controversial housing measures in an election year, by asking them to carry out a cost-benefit analysis and public consultation for the measure before he agrees to give them the ability.

The greater good versus political priorities in election year?

And while Joyce’s move may be cynical, it does show a sure-footed approach to political management and exactly why Joyce has doubled repeatedly as National’s go-to campaign manager.

He managed a National disaster in the Northland by-election campaign.

Stuck against a brick wall with a crosshair aimed between his eyes?

In election year, Joyce doesn’t want the headache.

What’s more important, Joyce’s head  or the New Zealand property market?

With a risk of stuffing housing even more and also bombing in the election.

Pot calls kettle empty

Neither the Greens nor Labour announced any new policies in their joint ‘State of the Nation’ event yesterday.

National’s Finance Minister and campaign organiser Steven Joyce commented on Twitter:

It did seem like a wasted opportunity. I suspect that Labour and Greens are holding back with major policy announcements until they see what National do in the budget in May to try and avoid being outmanoeuvred again.

And perhaps they waiting to see if National announce any new policies.

It’s unbelievable that at the beginning of election year the 1 largest party has no new policy to announce.

Or maybe not, National have tended to not announce much policy throughout their tenure in Government.

On the home page of National’s website they say what they are doing, not what they intend to do.  Defensive about their record rather than anything new.

Supporting safer families

We’re making changes to our family violence laws to prevent the abuse, keep victims safe, and stop perpetrators.

National’s comprehensive housing plan

National is committed to addressing the challenge of housing and we have a comprehensive plan to achieve that.

Helping more Kiwis buy their first home

Nearly 12,000 New Zealanders have received government grants to help them buy their first home in the first 12 months of National’s KiwiSaver HomeStart scheme.

An open and prosperous New Zealand

New Zealand has a strong, growing economy under National. That’s delivering more jobs and higher incomes for New Zealanders, and trade is a vital part of continuing this success.

Helping rural communities

When our primary sector succeeds, New Zealand succeeds. A successful primary sector is part of National’s plan to create more jobs, lift incomes, and build a more productive and competitive economy.

Better healthcare

National believes New Zealanders deserve high-quality health services and delivering better services remains our top priority. In 2016/17, a record $16.1 billion will be invested into health.

That’s in the past pot, not in the future pot. Business as usual and no indication of new policy proposals.

English and National come up with any new policies to take into the election campaign. That would differentiate his leadership from John Key’s.

Or is that pot empty?

Who next for Prime Minister?

If things go according to John Key’s suggested time frame then the National Party caucus will choose a new Prime Minister within a week. Breathtaking. This is a very tight timeframe for all MPs other than Bill English to consider their near future ambitions and to decice whether they are willing to hand over their time and their privacy to the country.

A UMR poll done from 27 September to 14 Octoberasked about preferences for a Key replacement:

  • Bill English 21%
  • Steven Joyce 16%
  • Paula Bennett 11%
  • Judith Collins 6%

Others mentioned as possibilities are Amy Adams (she seems to have preferred to work hard out of the public eye) and Simon Bridges (too soon for him). Jonathan Coleman has also been mentioned.

Key has  said he will support English if his current deputy decides to put himself in the reckoning. English appears to be the only one who knew about Key’s intentions well ion advance.

One thing is certain – politics and the country will continue on next year without Key as leader, and those who rise to fill gaps will take over the media and Opposition heat.

Labour will be rubbing their hands together, thinking that Key gone straight after their Mt Roskill by-election success will give them a better chance in next year’s election. It will – but how much remains to be seen. Key’s resignation won’t fix Labour’s problems and it’s hard to see them getting a 10-20% boost.

When an English-Little contest was suggested on Twitter journalists lamented the lack of excitement. This is one problem with our media, the Prime Ministers and Parliament are supposed to be running the country with a minimum of fuss, intervention and disruption.

They are not supposed to be click bait entertainers.


Added – poll number cruncher with a leftish viewpoint, Swordfish (from a Standard comment):

Here’s my March 2016 overview of public opinion on a post-Key successor (Polls over the last 5 years)

http://subzpsubzp.blogspot.co.nz/2016/03/next-national-leader_14.html

Greens versus Donald Trump

In Parliament today on behalf of the Prime Minister Steven Joyce moved a motion in support of the election of the President of the United States.

Hon STEVEN JOYCE: I move, That the House convey its congratulations to President-elect Donald Trump on his election as the next President of the United States, and to Vice-President-elect Mike Pence on his election, and in doing so express our desire to work with the incoming Trump Administration to continue building on New Zealand’s already strong relationship with the United States.

New Zealand will seek to build on this already-strong relationship with the incoming Trump Administration in order to advance our shared interests. In closing, I would also like to pay tribute to the outgoing administration led by President Barack Obama. President Obama has been a good friend to New Zealand, and we wish him all the best in the future.

Hon ANNETTE KING (Deputy Leader—Labour): The Labour Party congratulates Donald Trump on becoming the 45th President of the United States. I also want to congratulate Hillary Clinton, who achieved much in her public life, and who has been a good friend to New Zealand. There is no doubt, over the year-long divisive presidential campaign, that many Americans have been left fearful and concerned as to where they fit in their county. I call on Mr Trump to follow through on his words and pledge last night that it is now time for America to bind the wounds of division, and that he will be the President for all Americans.

Rt Hon WINSTON PETERS (Leader—NZ First): A week ago today I was honoured to speak in winegrowing territory in Marlborough, to its chamber of commerce. In a speech entitled “The grapes of wrath”, I predicted what so many experts did not…[lengthy speech along the lines of how what Trump has done should be called ‘doing a Winston’]

MARAMA FOX (Co-Leader—Māori Party): I had three words in mind and they were not those ones. I think they were pot, kettle, and black. Ha! We are here today to offer congratulations to the President-Elect, Donald Trump. Although I find it a little bit difficult, there was a collective sigh this morning and a girding of the loins for the next 4 years across the world. I am a pragmatist at heart. I like to see the silver lining around the clouds.

DAVID SEYMOUR (Leader—ACT): On behalf of the ACT Party, I would like to join with other leaders who have supported the motion congratulating the 45th President-Elect of the United States, Donald Trump. That happens in the context of a long friendship between our two countries and our two peoples. I think it is important that we respect the will of the American people.

In contrast Metiria Turei took a different approach:

METIRIA TUREI (Co-Leader—Green): “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” These are the words of one of the truly great Americans, Martin Luther King Jr.

Yesterday’s result in the US elections has left me and the Green Party even more determined than ever to fight for the values that we believe in. We have generations of families living in poverty; people who face uncertain futures, without proper housing or healthcare or education; and people who do not believe that being involved can make a difference. That is something that we can—that we must—change.

We must use the Trump election as a powerful motivator, a motivator to stay involved in the governance of our country, and to include others in that process; to organise; to be strong; to listen to each other; to speak truth to power; to find hope; and to be kind to each other—to be kind.

So, no, I will not support this motion to congratulate Trump, and neither will the Green Party. We vow to fight the climate change denial, the misogyny, and the racism represented by Trump. We will not let hate triumph. Thank you.


Full transcript: https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_20161110_20161110_08

The motion congratulating Donald Trump passed by 106 votes to 14 (the Green MPs).

The Greens are in to making stands based on their principles, and they can say what they like about the incoming president, and snub him if they choose.

But there is a well established democratic principle that even when you disagree with or don’t like political candidates if they are elected by their people then others need to accept this process and attempt at least to engage with and work with whoever leads other countries.

Perhaps this reflects the Greens’ lack of experience in that practicalities of governing situations.

You could shun half the country and half the world on principles, but to successfully govern the reality is you have to be prepared to accept whoever represents other countries and work with them.

Hillary Clinton and Barack Obama accepted that Trump had won the right to govern and Obama pledged to work with Trump to make his transition to power as seamless as possible, as he should.

If Greens became part of a government I wonder who it would work. They seem to not want to associate with many leaders and countries, including some of our biggest trading partners.

National kettle calling the pork barrelled

Steven Joyce played a significant part in National’s embarrassing result in the Northland by-election, which included a pork barrel promise to build ten bridges.

Now he is accusing Labour of pork barrel politics in the Mount Roskill by-election. He has a point, but so do those who accuse him of hypocrisy.

NZ Herald: National says Labour’s $680m Auckland light rail policy ‘pork barrel politics’

National’s Steven Joyce has accused Labour of panicking and “pork barrel” politics for its Mt Roskill byelection pledge to put $680 million into a light rail system for Auckland.

In an announcement linked to the Mt Roskill byelection on December 3, Labour leader Andrew Little released part of Labour’s transport policy for Auckland – $680m to help pay for the first stage of a light rail system from Wynyard Quarter to Mt Roskill.

Little, joined by Labour’s byelection candidate Michael Wood, set out Labour’s plan on Sunday for the Government to pay half of the $1.36b cost for light rail and Auckland Council the other half.

Joyce said the promise was “taking pork barrel politics to a whole new level”.
“Labour are hitting the panic button fairly early on,” Mr Joyce says. “Promising a $1.4 billion rail link between the electorate and the city looks very desperate.

It has echoes of last year’s Northland byelection, when National was accused of ”pork barrel” politics after Transport Minister Simon Bridges and its candidate Mark Osborne announced a promise to upgrade 10 one-way bridges in the region.

Joyce had overseen that campaign in which NZ First leader Winston Peters took the seat the National Party had long held.

So Joyce is being rather hypocritical.

Little dismissed Joyce’s criticism, saying the light rail policy was completely different to National’s policy to upgrade 10 bridges in Northland.

Labour’s policy to fund 1000 more Police had also been timed for the Mt Roskill by election and Little said it also proposed to re-open a community policing station in the electorate.

Little said no further major announcements were expected for the Mt Roskill by election. A policy announcement he was making on jobs at Labour’s annual conference next weekend would be national.

Meanwhile on the @PaulHenryShow

Labour’s @PhilTwyford insists the pledge for a light rail is about solving the city’s transport woes and not about playing politics.

Twyford is claiming that this isn’t playing politics:

. & announcing for Dom Rd!

cv-q_wbuaaesrft

Yeah, right.

Politicians seem to be unaware or uncaring that porcine hypocrisy is likely to raise more cynicism than votes, as National found to their significant cost in Northland.

Brash targeting Peters with racial sledgehammer

I doubt that Don Brash is deliberately being devious with his Hobson’s Pledge ‘anti-separatist’ campaign. It looks like a resurrection of his  claim to infamy from his Orewa speech in 2004 – that sparked a recovery in National party support but National have now dismissed this brash attempt at stirring up race debate again.

NZ Herald: Brash’s new campaign dismissed by political leaders

There is no longer any appetite in New Zealand for a race-based campaign led by former National Party leader Don Brash, political leaders say.

Both National and Labour dismissed Brash’s latest bid to put an end to “preferential treatment” for Maori in New Zealand.

Even the Act Party which Brash used to lead did not endorse the new “Hobson’s Pledge” campaign, which Brash is fronting.

The campaign echoes Brash’s infamous “one law for all” speech at Orewa in 2004 and the Iwi/Kiwi billboards used when he was National Party leader.

National Party campaign chairman Steven Joyce said today that times had changed, and he did not see the new campaign as a threat.

“The difficulty in what he’s focusing on is that most New Zealanders realise we take a very balanced approach to these issues.

While some issues hidden amongst Brash’s rhetoric deserve discussion his sledgehammer approach is a hopeless way to try and achieve anything but elevating angst and anger.

Brash sees one possible ally in Parliament – Winston Peters and NZ First.

Brash said that could put him in the unusual position of donating money to New Zealand First leader Winston Peters, who was once a sworn enemy.

“As it stands at the moment, the only political party which is making an issue of this is New Zealand First,” he said.

“Someone with my particular background is not wildly enthusiastic about that.”

Peters probably won’t be wildly enthusiastic about Brash stealing his thunder. Brash is far from being his favourite political activist.

Media have sought a reaction from Peters but so far there seems to have been no response.

Is Brash doing NZ First a favour by highlighting one of Winston’s hobby horses? Or is he going to damage NZ First support?

It’s hard to see whether Brash is trying to deliberately or inadvertently impact on NZ First.

Brash effectively trashed ACT when he hijacked the party in 2011. David Seymour has distanced himself from Brash:

Act Party leader David Seymour said there were aspects of Hobson’s Pledge that he agreed with. He opposed the creation of specific Maori positions within local government and Resource Management Act proposals which give iwi a new role in consenting decisions.

But Act’s position on Maori issues were changing, he said.

“If you look at where Act’s going today … partnership schools have been overwhelmingly endorsed by Maori.

“If it came down a choice between scrapping Maori seats and reforming education so that people have real choice … I don’t need to tell you which is Act’s priorities these days.”

What’s more effective in politics, pandering to populist racial intolerance, or achieving actual results?

Despite a support surge after his Orewa speech Brash ended up failing in 2005, and he nearly destroyed ACT in 2011.

Working with Maori on positive education initiatives, as Seymour is doing, seems to be a far better approach than inflaming and dividing – an ironic but inevitable effect of Brash’s blunt ‘one people’ ideal.

Stuff: John Key: Kiwis uninterested in ‘broken record’ attacks on Maori favouritism

Kiwis are not interested in Don Brash’s “broken record” of attacks on Maori favouritism, Prime Minister John Key says.

Key says he is unworried by the launch of an “anti-separatism” campaign fronted by the former National Party leader, intended to pressure politicians into opposing preferential treatment of Maori.

Key said he was not worried about the campaign, which was part of the democratic process, and believed most Kiwis “want to live in a harmonious New Zealand”.

“It’s sort of pretty much a broken record from Don, but I think New Zealanders have seen in the last decade what’s taken place, they’ve seen that ultimately as Treaty partners, Maori and the Crown have to work together and actually we’re a stronger country for doing that.”

Key did not believe there was separatism in New Zealand, but said the Crown had “legal obligations” to Maori which it had to follow.

“They have certain rights which are bestowed upon them and we have to honour the court rulings for doing that…if we don’t do that, the courts rule against us.”

 

ACT versus National on tax

This week’s ACT Free Press is highly critical of National “boasting that they’ve increased wealth redistribution”.

From a press release from Steven Joyce – Significant income redistribution after tax reforms:

New data from the Treasury shows that income redistribution across New Zealand’s income tax and support system continues to increase, with the top 10 per cent of households forecast to pay 37.2 per cent of income tax in 2016/17, compared with 35.5 per cent in 2007/08.

“This latest data confirms that New Zealand’s income tax and support system significantly redistribute incomes to households in need,” Acting Finance Minister Steven Joyce says.

The rich are paying a bigger proportion of the income tax:

“Higher income households are paying a larger share of income tax than they were in 2008, and lower income households are paying less – the 30 per cent of households with the lowest incomes are forecast to pay just 5.4 per cent of income tax, compared with 6.3 per cent in 2007/08.

“This is before the effect of redistribution from Working For Families and benefits. The Government has increased support for low income families to help New Zealanders through times of need. So at any particular time, a large number of households effectively don’t pay income tax,” Mr Joyce says.

“It’s appropriate to maintain a tax and income support system that helps low and middle income households when they most need it.”

And 42% of households will pay less income tax than they receive from than they receive from welfare benefits, Working for Families, New Zealand Superannuation and accommodation subsidies. This is up from 39% in 2007/2008.

This won’t include what GST they pay though, which can be where about half of the income of the poor people now goes.

ACT Free Press:

Housing is the Underlying Driver
Also last week the Ministry of Social Development released its update of household income inequality from 1982-2015.  It measures income inequality before housing costs and after housing costs. 

Specifically
Dr Bryce Wilkinson of the New Zealand Initiative says there has been no significant change in income inequality over the last 10, 15, 20 or even 25 years depending on the measure used, before housing costs.  However the bottom 20 per cent of households (by income) spent 29 per cent of their income on housing in the 1980s compared with 54 per cent now.

Free Press concludes:

The National Party is taxing top earners hard, then shovelling the money at low income earners who pay more for housing.  Free Press suspects that it is mostly top earners who benefit from rising house prices, so completing the money-go-round.  This is nuts.

When the money-go-round is spinning fast it can be hard to slow down and difficult to hop off.

What would ACT do?

It is time to give taxpayers relief.  As ACT has said before, the best way to do this is to index tax brackets to inflation (this would have saved the average household $2,500 in tax since 2010 by ending bracket creep).  Ideally we should cut the top rates, clearly the ‘rich’ (read hard working PAYE earners) are paying their share. 

I agree that tax increases by stealth – allowing bracket creep without adjustment – should be dealt with differently.

At the same time, there needs to be serious land use and infrastructure funding reform to get the housing market functioning again.

There’s been a lot of talk but little tangible change on housing, apart from prices continuing to escalate.

However if National reduced income tax for higher earners and if they reduced tax redistribution to poorer people there would be political hell to pay.

 

 

The Nation – student visas, NZ First & Affco

On The Nation this morning:

As 150 foreign students face being sent back to India after being drawn into a student visa scam, Newshub political editor Patrick Gower asks Tertiary Education Minister Steven Joyce if the entire sector needs to be cleaned up. Foreign education is a major earner for this country, but is widespread fraud harming our reputation? 

Some background from RNZ: Insight: Fraud, Fees and Student VisasThe work and residence rights that go with study visas to New Zealand have attracted thousands of what Immigration New Zealand suspects are dodgy applications from India. But, at the same time, the government wants this country’s international education market to reach an annual income of $5 billion a year. Should more be done to protect the industry – and the students within it?

Winston Peters joins us from the New Zealand First conference in Dunedin. The polls point to him being the kingmaker after the next election… so what would he demand in return for forming a government?

I might listen to him live, his conference speech tomorrow is open to the public, 1:45 pm in the Glenroy Auditorium, Dunedin.

Caitlin McGee takes a look at one of the country’s largest food companies, Affco Talley’s. It’s a major employer, but is it a good corporate citizen?