Peters suffered breach of privacy but failed to identify who was responsible

The High Court (Venning J) has released a decision that found that Winston Peters had his privacy breached, but in court proceedings he failed to identify who was responsible, despite accusing a number of MPs and public servants. Therefore his claims for damages and declarations have been dismissed

There has also been a substantial cost to the taxpayers who paid for the defendants, but Peters may now have to pay costs (decision reserved).

Plaintiff: Winston Peters

First Defendant: Paula Bennett
Second Defendant: Peter Hughes (State Services Commissioner)
Third Defendant: Anne Tolley
Fourth Defendant: THE ATTORNEY GENERAL sued on behalf of the MINISTRY OF SOCIAL DEVELOPMENT
Fifth Defendant: Brendan Boyle (chief executive of the MSD)

Introduction: 

[1] The Right Honourable Winston Peters claims the defendants have breached his privacy.

[2] In April 2010, Mr Peters applied for and was granted New Zealand Superannuation (NZS) by the Ministry of Social Development (MSD). Mr Peters was paid NZS at the single rate. In May 2017, Mr Peters’ partner, Ms Trotman, applied for NZS. In the course of processing her application, MSD reviewed Mr Peters’ file. The review raised the question of why he was being paid NZS at the single rate when he had a partner. An MSD officer met with Mr Peters in July 2017. It was agreed Mr Peters had been overpaid NZS as he was not single and had a partner, Ms Trotman, at the time he was granted NZS. Mr Peters immediately arranged for the overpayment to be repaid.

[3] In the meantime, in June 2017, Mr Boyle, the chief executive of the MSD, had disclosed the overpayment and the MSD investigation into it (the payment irregularity) to the State Services Commission (SSC).

[4] On 31 July 2017, Mr Boyle also briefed Ms Tolley, the Minister of Social Welfare at the time, about the payment irregularity. On 1 August 2017, Mr Hughes, the State Services Commissioner, briefed Ms Bennett, the Minister for State Services at the time.

[5] An unknown source disclosed the payment irregularity to the media by anonymous calls to reporters between 23 and 25 August 2017. On one occasion the source alleged Mr Peters had lied when applying for NZS.

[6] On 26 August 2017, Lloyd Burr, a journalist approached Mr Peters. Mr Burr made it clear he had knowledge of the payment irregularity. To mitigate the damage to him personally and politically, particularly in the context of a general election due to be held on 23 September 2017, Mr Peters issued a press statement the next day. Over the next weeks and even months, a number of news items followed in which the payment irregularity and Mr Peters’ situation were discussed further.

The claim

[7] Mr Peters says that the public disclosure of the payment irregularity was a breach of his right to privacy. He says the defendants had a duty to keep the details of the payment irregularity confidential. In disclosing the payment irregularity to others Mr Peters says the defendants breached that duty.3 He seeks declaratory relief and damages.

Some points of interest.

[24] While Ms S should have picked up that question 26 had not been properly or adequately answered and the form was incomplete, Mr Peters must also bear some responsibility for the resultant ambiguity in the form as completed and the consequent issues that arose. To the left-hand side of question 26 is the definition of partner. If Mr Peters had read that definition, it would have been clear, given that Ms Trotman was his partner, that he should have completed the primary question in question 26 and answered it by ticking “Yes”.

[30] There was one further relevant event that occurred before Ms Trotman made her application for superannuation in May 2017. On 18 March 2014, the MSD sent a standard letter to Mr Peters which included a request that asked him to check the following details:

Relationship Status: You are single.
Your living situation: You are not living alone.

[31] Mr Peters did not respond to the letter. He has no recollection of it but accepts he would have received it. He says he understood the letter was asking if there was any change in his circumstances. He took the view that there had been no change in his circumstances since the 2010 interview. While Mr Peters’ details had not changed, the letter expressly set out that the MSD’s records of Mr Peters’ relationship status was that he was single. That was incorrect. If Mr Peters had paid more attention to the letter, he would have realised there was an issue with the MSD’s records regarding his initial application.

There seems to be a contradiction here. “He has no recollection of it” but “He says he understood the letter was asking if there was any change in his circumstances. He took the view that there had been no change in his circumstances since the 2010 interview.”

I don’t now he could have taken an understanding from a letter and taken a view on a letter he had no recollection of. This sounds odd to me.

[75] With respect to Mr Soper, his evidence that, in his opinion, the information was deliberately leaked as an attempt by Mr Peters’ political opponents to damage his credibility and to do what the Prime Minister wanted, which was “to cut out the middleman”, namely NZ First, is speculative. It is not the opinion of an expert based on established fact. Without direct evidence of the original source of the disclosure, Mr Soper’s opinion is speculative. Mr Soper’s opinion that it must have been a political opponent (and inferentially) someone from the National Party or a National Party supporter lacks a proven factual basis. It does not satisfy the requirement for admissibility as expert opinion evidence. Even if it was generally correct that the disclosure was politically motivated, it may not have been disclosed, for example, by a National Party member or supporter. It could also have been disclosed by a Green Party supporter aggrieved at the public backlash against Ms Turei following her disclosure of fraud.

[76] None of the journalists, including Mr Soper, were prepared to disclose their sources. They invoked the protection of s 68(1) Evidence Act. I was not asked to make an order under s 68(2) and was not in any event, provided with evidence to satisfy me that the criteria in that subsection were satisfied.

[108] Mr Peter’s reasonable expectation that the payment irregularity would be kept private must be contextual. It is not absolute. It must take into account that there are some parties who it was necessary or appropriate to disclose the information to. As noted, that includes a number of people within the MSD involved directly in the review and investigation. It also extends to disclosure to the chief executive of the MSD and from him to the chief executive of the SSC as Mr Henry conceded in opening.

[117] In summary, on the first point, I accept that Mr Peters had a reasonable expectation that the details of the payment irregularity would not be disclosed to parties who did not have a genuine need to know about it or a proper interest in knowing about it, and certainly had a reasonable expectation that the payment irregularity would not be disclosed to the media.

[125] In summary, I remain of the view that it would be highly offensive to deliberately disclose details of the payment irregularity to the media.

[141] Mr Peters seeks to overcome his evidential difficulty in identifying who disclosed his private information concerning the payment irregularity to members of the media on 23 and 25 August 2017 by reliance on the doctrine of res ipsa loquitur.

[143] Res ipsa loquitur, literally “the facts speak for themselves”, is a rule of evidence. Res ipsa loquitur generally arises in the context of negligence but is not restricted to that. In the Canadian case of Royal Bank of Canada v Boussoulas, for example, the Ontario Superior Court of Justice accepted it could apply to fraud where fraud was the only consistent explanation for the facts proven.

[148] There are a number of possible explanations as to how the details of the payment irregularity were disclosed to the media. While it is possible the disclosure was politically motivated, it could have been made by members of either of the other major parties, (at that time neither of them knew who Mr Peters and NZ First might support) or even a disaffected NZ First supporter disappointed in a perceived failing by Mr Peters. Further, a supporter of the Green Party or of Ms Turei who considered she had been treated harshly by the media could have been the source of disclosure to the media.

[149] That is the fundamental difficulty for Mr Peters’ reliance on res ipsa loquitur. The doctrine is not applicable where the plaintiff cannot identify the defendant…

[153] In summary, there are a number of elements to Mr Peters’ claim against Ms Bennett and Ms Tolley but they come down to the following key points. First, that he had a reasonable expectation of privacy that the details of the payment irregularity would be kept private. For the reasons given above, I accept that has been established to the extent that he had a reasonable expectation it would only be disclosed to those persons who had a proper interest or genuine need to know. I also accept that public disclosure would be considered highly offensive by a reasonable objective person. Again, for the reasons above, I agree that disclosure of the payment irregularity to the media with the intention it be made publicly available would be considered offensive to a reasonable objective person.

[154] Mr Peters’ pleaded case against the first and third defendants is based on the reasoning that the first and third defendants were members of a political party opposed to Mr Peters so that the information must have been leaked by them to persons who disclosed it to the media. But Mr Henry did not pursue that case directly in closing submission. He cannot rely on res ipsa loquitur to make it out.

So Peters failed in his accusations against Bennett and Tolley – he had no evidence they were responsible for the leak.

[168] The declaratory relief sought is based on the same pleaded facts as the claim for damages. With the exception of Ms Tolley’s unguarded comment to her sister, the disclosures made by the first and third defendants were either made for proper purposes or to persons who had a genuine need to know about the payment irregularity. Ms Tolley was not challenged on her evidence regarding her reason for discussing the matter with her husband and, given the brief and very general nature of the comment made to her sister, I decline to make any such declaration.

[169] The plaintiff’s claim against the first and third defendants on the first and fourth causes of action fails.

[176] I accept Mr Peters had a reasonable expectation that details of the payment irregularity would be kept private, to the extent that it would not be disclosed except for a proper purpose or to parties who did not have a genuine need to know and that it would not be disclosed to the media. But that does not support Mr Peters’ claim that the MSD and Mr Boyle should have kept it private if that is to be taken to mean to not disclose it at all…

[181] Mr Peter’s cannot identify the source of the leak to the media. He cannot say whether it originated from an MSD team member or one of the persons who later obtained the information through the Ministers’ offices. He is left with his reliance on the doctrine of res ipsa loquitur in his case against the fourth defendant, sued on behalf of the MSD. But for the reasons expressed above, the doctrine does not assist the plaintiff…

[231] Sir Maarten confirmed that, contrary to Mr Peters’ suggestion, in his experience, whether it was appropriate to brief a Minister did not depend on the Department requiring the assistance of the Minister or of Cabinet. Sir Maarten had not heard of or applied the criteria Mr Peters referred to. I note they are not referred to in the Cabinet Manual. As Ms Casey submitted, the process Mr Peters suggested was not a convention. None of the other Crown witnesses were aware of its application. Neither of the Ministers at the time were familiar with it. I accept the defence evidence on that point.

Peters was wrong about convention of briefing Ministers.

[236] In summary, for the above reasons and in the particular circumstances of this case, Mr Peter’s general allegations against the fourth defendant sued on behalf of the MSD cannot succeed as the plaintiff cannot rely on the doctrine of res ipsa loquitur to overcome his inability to prove that the source of the leak was a MSD member. I also accept that the second and fifth defendants were justified in disclosing the payment irregularity and Mr Peters’ identity to the Ministers when they briefed them on the ‘no surprises’ basis. In the particular circumstances of this case, the Ministers had a proper interest in knowing Mr Peters had been overpaid NZS, that the MSD had investigated it and that he had been treated the same as any other person would be in the circumstances. The plaintiff’s claim under the first cause of action against the Crown defendants fails.

[245] The allegation that the disclosure had no purpose but to disclose the payment irregularity to a political opponent is also not made out. The evidence is clear the disclosure within the MSD and to Mr Boyle, and by Mr Boyle to Mr Hughes, and then to the Ministers was not for that purpose. Further, there is the point Sir Maarten made that it would be quite improper for a chief executive to attempt to filter information to a minister out of a concern how the minister might use it.

[250] For the reasons given above, the disclosure by Mr Hughes to his Minister was for a proper purpose and to a party who had a genuine interest in receiving it. It cannot be said the disclosure was highly offensive as it was a communication made in confidence to a Minister to whom Mr Hughes was responsible to, and the content was factual and objective.

[274] Mr Soper explained his answer on the basis that he was not saying it was not serious. Politically it was very serious, but what he was saying is that the oversight in payment was not that serious as the money had been repaid. Later in the same interview when asked “Where to from now, how politically damaging could this be?” Mr Soper answered “I don’t think politically damaging at all”. Again, Mr Soper sought to qualify that answer by noting that that statement had been made the day after Mr Peters’ statement and the firestorm had not actually begun at that stage.

[275] Mr Peter’s private information about the payment irregularity should not have been disclosed to the media. The deliberate disclosure of that private information to the media sources caused Mr Peters harm and distress, but ultimately it was mitigated by the actions he took. In the circumstances, if Mr Peters could have identified who disclosed his private information to the media then damages in the region of $75,000 to $100,000 in total might have been appropriate. This was a deliberate breach of his privacy with the intention of publicly embarrassing him and causing him harm.

So an award of damages might have been appropriate if Peters had identified who leaked his information to media.

Summary/result

276] Mr Peters had a reasonable expectation that the details of the payment irregularity would be kept private and not disclosed to parties who did not have a genuine need to know about it or a proper interest in knowing about it. In particular, he had a reasonable expectation that the details of the payment irregularity would not be disclosed to the media.

[277] The deliberate disclosure of the details of the payment irregularity to the media would be regarded as highly offensive to an objective reasonable person.

[278] Mr Peter’s claim against all defendants fails as he is not able to establish that they were responsible for the disclosure of the payment irregularity to the media. He has conceded that neither Ms Bennett nor Ms Tolley were directly responsible for the disclosure to the media. Further, with the exception of the very general, unguarded
comment by Ms Tolley to her sister, the disclosures by the first and third defendants were for a proper purpose or otherwise to persons with a genuine interest in knowing.

[279] The disclosure by the fifth defendant to the SSC and by both the second and fifth defendants to their Ministers were, in the particular circumstances of this case, for a proper purpose and the Ministers had a genuine interest in knowing the details of the payment irregularity.

[280] The plaintiff is unable to rely on the doctrine of res ipsa loquitur in this case to make out a claim against any of the defendants, including the fourth defendant.

[281] The plaintiff’s claims for damages and declarations are dismissed.

Costs are yet to be decided, but they usually go against the unsuccessful party in legal proceedings, so I presume that Peters may be liable for costs. If so that will cover some of what taxpayers provided to the defendants.

Peters was justified in complaining about his privacy being breached, but failed to identify the leaker. Instead he accused a number of people, but failed, and that is likely to come at a significant cost to him.

In my opinion this is an example of Peters making accusations against political opponents, sometimes claiming to have evidence or implying he has evidence, but failing to come up with evidence.

His reputation was damaged by disclosure of his Super overpayment, but I believe he has also damaged his own reputation.

The question remains as to why Peters made an incorrect claim on his Super application and failed to notice when he started receiving payments and for the next for seven years that he was being paid more than he was entitled to.

Full judgment: Peters v Bennett [2020] NZHC 761 (20 April 2020)


Newsroom 13 November 2019: Winston Peters accepts National ministers didn’t leak

RNZ today: Paula Bennett welcomes Winston Peters’ privacy court case failure (includes ausio)

National’s deputy leader Paula Bennett says her name has been cleared by the courts after – what she calls – a fishing expedition by Winston Peters for his own political purposes.

Peters claimed the leak was for political purposes and targeted Bennett and Tolley, but Bennett has now responded saying Peters took her to court for political purposes.

The proceeding was initially filed in court just before NZ First went into negotiations with National (Bennett was involved) to supposedly try to form a coalition.

 

Peters drops leak accusations against Bennett, Tolley

It was obvious that all the Winston Peters accusations and litigation couldn’t stand up. He launched what was clearly a fishing expedition to try to expose the culprit.

Peters, via his lawyer Brian Henry’s closing address in court, has conceded that neither Paula Bennett nor Anne Tolley leaked information about his seven year superannuation overpayments.

Newsroom: Peters accepts National ministers didn’t leak

Winston Peters’ has accepted in the High Court that two former National ministers he had been suing for $450,000 for breaching his privacy were not the source of the leak or responsible for it.

In his closing submission today, Peters’ lawyer Brian Henry said both Anne Tolley and Paula Bennett denied in their evidence leaking information on Peters’ seven-year overpayment of superannuation – and the lawyer for the Ministry of Social Development and public servants did not challenge those denials.

“That left the MSD in the position that they now cannot avoid a finding that the breach was on MSD,” Henry said. “The plaintiff was expecting a challenge from MSD to the ministers, but the MSD has not challenged the evidence that they [the ministers] did not leak.

“That dual denial removed two of the options that the plaintiff, when it opened its case, was expecting to have examined in the court.”

That means Peters is no longer suing the National pair for damages.

This raises questions about Peters’ claims, and the cost he has inflicted on taxpayers to try to justify his accusations.

It also makes Barry Soper’s assertions that it must have been a National leak (with no evidence provided) look a bit silly.

Henry said Peters’ case was that under the tort of privacy he had a reasonable expectation that his private information would not be made public and what was disclosed had been highly offensive.

“In this case, the MSD exclusively held the plaintiff’s private information. Unless they can rebut the evidence there arises an evidential presumption.

“The larger the group [who had become aware in the ministry] the greater the foreseeability the matter would be leaked.

“The perpetrator will never front. Someone in MSD in full knowledge breached the plaintiff’s privacy and set off a chain of communications causing damage to his reputation.”

Henry said: “This is not likely to be a mistake.”

So he now asserts that someone in MSD leaked the information, but as there is no evidence suggests the assumption can be made. I don’t know how proof or lack thereof works in cases like this.

The ‘chain of communications’ led to journalists asking Peters about the overpayment, and Peters then went public himself. There is no certainty that media would have published the information. This is an interesting situation.

MSD lawyers claimed that Peters’ reputation hadn’t been affected by anyone but himself.

It is arguable that if Peters had just admitted making a mistake on his application and not noticing the overpayment, then paying it back when brought to his attention, then this would have blown over and would be virtually forgotten by now.

Instead Peters accused a swath of people for the leak with no evidence to back his claims, made assertions and denials that were inaccurate or wrong, filed legal action against National MPs just prior to going into coalition negotiations with National (I think without revealing the legal filing), and then proceeded with the case over the next two years.

Some have suggested he has simply enhanced negative aspects of his reputation.

There is a serious issue of the revealing of private information held by  Government department. That should have been investigated – although leaks are common and culprits are often not identified.

But the initial information Peters revealed himself, and revelations through the court hearings, have been self damaging more than anything.

As well as damages, Peters wants a declaration from the court that his privacy was breached.

The NZ First leader says it is necessary to have the tort of privacy recognise such a breach because in the digital world “the dissemination of [private] information is now in the hands of irresponsible persons… and politicians are not extremely vulnerable”.

At the end of his submissions, Henry clarified for the judge that Peters was now seeking the $450,000 in damages under his first course of action from all defendants together rather than seeking that sum from each.

That’s an odd switch. Maybe he realised Peters was seeking too much with Bennett and Tolley out of the firing line.

Questioned further by Justice Venning, he said the fact Bennett and Tolley could no longer be accepted as the source of the leaks meant that they could not continue to be included in the cause of action seeking that money. So the damages are sought, together, from Boyle, Hughes and MSD.

In three further causes of action, Peters is seeking declarations from the judge that his privacy was breached by the public servants in briefing their ministers and by the two ministers in accepting those briefings.

A challenge for the judge to address all of that.

A swipe at Kiwiblog fizzled:

Henry disputed a claim by Bruce Gray QC, for the ministers, that there had been no social media reports of Peters’ overpayment presented to the court that had occurred before Peters issued his press release announcing that news.

He pointed to a Kiwiblog posting about the risks for Peters if the overpayment news was correct. However he gave the court the date August 28 for the Kiwiblog comment, and that was actually the day after Peters issued his press release.

Whoops.

The only social media content appearing before Peters went public had been three tweets from the writer of this article about a possible major political story, and the tweets did not mention him, his party, gender, age or superannuation.

The writer had to provide a sworn statement in the earliest part of the proceedings and pointed out that intense speculation on Twitter had followed those tweets but that not one that was connected to his tweets had referred to or even hinted at Peters being involved.

The writer is Tim Murphy who has provided excellent coverage of the hearing.

Earlier, Victoria Casey QC for Hughes, Boyle and the ministry, said Peters’ pleading alleging bad faith by her clients would, if found to be so, be “catastrophic” for the officials. “If established, it would be the end of any career for them in the public service.

“It’s important that Mr Peters is held to his pleadings,” she said.

The bad faith accusation was raised by Peters in his fourth ‘statement in reply’ before the hearing began. “Mr Peters is not entitled to pursue new allegations of bad faith.”

(Henry later told the court he was saying officials had not acted in good faith rather than they had acted in bad faith. That was so those defendants had to disprove his claim rather than Peters having to prove ‘bad faith’.)

Justice Venning has reserved his decision, which he said was unlikely before the end of the year.

I expect he will want to take some time and care in writing his decision. I wonder how close to next year’s election campaign the decision will be released.


A (lawyer) comment from Kiwiblog (typos corrected):

I was astonished to read of Mr Henry’s concession that neither of Anne Tolley or Paula Bennett leaked anything.
If that is the case the claim against them will fail absolutely.

I would anticipate that Mr Gray will ask for judgement for Anne Tolley and Paula Bennett and that there be an order for costs against Mr Peters on an indemnity basis.

Yeah, costs. They could amount to a lot. Peters will be hoping to have costs warded in his favour for his remaining claims, but that my only balance out these costs.

Thinking about it, Peters was hardly likely to succeed in all of his claims, so was always going to be exposed to costs.

MSD, DIA say no Super leak from them

Following an Inland Revenue investigation that found no evidence of a leak of Winston Peter’s super over payment – see  Inland Revenue “could not have been the source” of Super leak – both the Ministry of Social Development and the Department of Internal Affairs also found no evidence of a leak from their departments.

Ministry of Social Development releases investigation finding:

MSD on Winston Peters super leak investigation

Following information regarding Mr Winston Peter’s Superannuation payments entering the public arena, the Ministry launched an investigation to assess whether there was any indication that a Ministry employee may have been the source of the information.

That process is now complete, and we can confirm that all staff that had access to the relevant information had a reasonable business purpose for accessing it, and there is no evidence that this information was passed to a third party.

The Ministry holds a great deal of very personal information about people and their families that New Zealanders trust us to safeguard.

Both data searches and staff interviews were employed in this investigation.
If further information relating to this matter comes to light, MSD will make further investigations as necessary.

 

DIA statement: Privacy investigation complete

Department of Internal Affairs investigation into Peters leak

We investigated whether any Ministerial Services staff received or passed on information regarding the Rt. Hon. Winston Peters’ superannuation matter.

The investigation process included a search of digital records and a series of interviews with Ministerial Services staff. It found that five Ministerial Services employees had received the information before it was reported by media.

There was no evidence that the information was provided to media or third parties by these staff members.

The Department takes privacy seriously, and upholding the confidentiality of information forms part of the Code of Conduct all employees sign.

If further information comes to light, the Department will undertake further inquiries as necessary.

Peters claims he was alerted to the leak before it happened by a ‘very senior National Party person’ but no details or names have been given.

Details and timeline at RNZ: Third probe fails to find leaker of Peters’ super info

Labour’s Super policy

Labour have announced their superannuation policy. It includes pledges to keep the entitlement age at 65, and resuming payments to the Super fund.


Labour secures the future for NZ Super

A Labour Government will secure the future for New Zealand Superannuation so we can continue to provide superannuation to those retiring at age 65, says Leader of the Opposition Andrew Little.

“One of the first things a Labour-led Government will do is resume payments to the NZ Superannuation Fund, so we can secure its future. National’s failure to invest in the Fund puts the retirement plans of New Zealanders at risk.

“Despite finally running surpluses after years of trying, the Government says it won’t resume Super contributions until 2021/22 financial year, while promising tax cuts that will hand $400 million to the top 10 per cent of income earners.

“The value of the contributions not made by National during its period in office is nearly $14 billion. Currently the Fund is worth $33 billion. The NZ Super Fund estimates that, had contributions continued to be made, it would now be worth $52.6 billion.

“National has sold the future of New Zealand short by billions and billions. By the time National plans to finally resume contributions, a Labour Government will have doubled the size of the current fund to $63 billion.

“This will equate to $6,500 per person extra in the Fund by 2021/22 under Labour. More importantly, we can continue to afford to leave the retirement age at 65; unlike National which wants to lift the age to 67.

“The argument to lift the age from 65 just doesn’t stack up. I’ve spent 20 years working with people who struggle to get to 65 now before they retire because of the physical nature of their work; that hasn’t changed.

“I’m absolutely clear that there will be no change. A Labour Government I lead will keep the age of entitlement at 65 and we will re-start contributions to the New Zealand Superannuation Fund immediately.

“This election will provide a clear choice – only a Labour Government’s fresh approach will make the investments we need to secure the future for all New Zealanders,” says Andrew Little.


More from Grant Robertson via RNZ: Labour pledges to boost Superannuation Fund

Labour finance spokesperson Grant Robertson said if payments had continued over the past eight years, at nearly $53b, instead of its current worth of $33b.

“We cannot afford if we want to keep paying Super out to people in a sustainable way, to not be contributing to the Super Fund.

“We can’t lump on to future generations the full cost of Super, we need to spread it out.”

Mr Robertson said National made the right decision to suspend contributions as New Zealand recovered from the Global Financial Crisis, but the government should have restarted the payments by now.

“Back then National said when once they got into surplus they would restart contributions. They then changed their position to be tagged to an arbitrary debt-ratio. We don’t believe that’s correct.

“We can see from the past performance of the fund that New Zealanders would be significantly better off had we been making contributions.”

But the country would have clocked up substantially more debt, or would have clamped down on spending much more.

Labour’s commitments “can be funded out of existing tax revenue”

Labour leader Andrew Little says that any Labour policies can be funded out of existing and forecast revenues and tax rates won’t be changed.

In an interview on The Nation Little made commitments of sorts on not raising taxes:

We are not planning on any tax changes for the 2017 election. We will finely calibrate what we do once we see what the Government does in its foreshadowed tax changes, which we assume will be in this year’s budget, but who knows?

They are not planning any tax changes now but who knows what they might plan after the budget?

So we are focused and we are talking to New Zealanders about and I will make commitments to New Zealanders about the problems that are here and now. And the commitments that we’re making – all of them – can be funded out of existing tax revenue. That’s what we’re focused on. That’s we’re campaigning on.

So we will have to wait and see how Labour proposes to finance it’s policies. They have already talked about:

  • Resuming contributions to the Super fund and leaving the increase in costs of Super as they are.
  • Funding more police.
  • More health funding.
  • More education funding.
  • Increase social housing and state housing
  • Kiwibuild will build 100,000 new houses over 10 years (eventually self funding)
  • Labour said it would bring in three years of free post-school education over a person’s lifetime costing $1.2 billion a year by 2025 (the first year funded from money earmarked by the government for tax cuts).

So if National announce tax cuts or threshold adjustments Labour would overturn them or use them to fund policies?

Also:

Lisa Owens: Another thing is the Children’s Commissioner. He wants the Government to commit to a target of lowering the number of children in severe hardship by 10% over a period of 12 months. Will you commit right now to meeting that target?

Andrew Little: Ye—Two things we’re going to do. We will have a child poverty measure that we’re going to commit to, and I’ve already said every budget we will report on how we’re going against that measure, and we are absolutely determined to reduce child poverty in the way that the Children’s Commissioner is talking about.

…Yeah, because I think his figure is roughly 150,000-odd, and lowering that by 10% – I mean, yeah, if we can’t do that and we’re not prepared to commit to that – and I say we are – then, you know, we’ve got something seriously wrong going on.

That hasn’t been costed yet.

And it has to be remembered that Labour will need at least NZ First or Greens (or both) to form the next Government. They will want some of their own policies in the mix. Policies that are likely to cost extra money.

Any policy costings by Labour are pointless on their own. The cost of a change of Government needs to include likely NZ First and Green policy costs on top of Labour’s own.

It’s even possible that Labour will put forward a “no tax increase” policy but then ditch that in post-election negotiations with NZ First and Greens.

Financial credibility is likely to be a major election issue. Little will have to have some good answers to the inevitable questions of affordability of policies of a Labour led coalition that Labour may only have half the voting power in.

 

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.”

 

Seymour slams Super policies

Act MP David Seymour has slammed ‘baby boomers’ (I’m one of those) that he says will “turn our country into a debt-ridden basket case”.

The Spinoff: NZ baby boomers are building a banana republic, and no one gives a shit

The Treasury has made it clear that current superannuation policies will turn our country into a debt-ridden basket case, and yet media remain largely silent and politicians in denial. Young people need to get voting in a hurry, writes David Seymour.

You could be forgiven for missing that the Treasury published its four-yearly Long-term Fiscal Outlook this week (please, please stay with me, I promise this is worth it). The gist of the report is the same as the previous two editions:

If no policy changes are made, by 2060, when current students reach retirement age, government debt will be 206 per cent of GDP.

No matter how well you prepare for retirement, you’ll be living in a banana republic.

No, it’s unlikely to be a republic, New Zealand politicians are as reluctant to deal with ditch the monarchy as they are dealing with escalating superannuation costs.

The reason? Ageing baby boomers who will be more numerous and longer-lived in retirement than any generation before them. Right now there are four working-aged taxpayers supporting every retiree, but by the time current university students retire there will be only two.

Probably – unless eating ourselves to earlier deaths reverses the improving life expectancy trends of recent decades.

The cost of pensions and healthcare as a share of the economy will double, the government will run large deficits, and the international financial community will demand higher interest rates on New Zealand government debt, leading to larger deficits.

John Key and Bill English claim the country can afford the huge increases in costs, or they don’t care about leaving the problem for future governments.

The first way of absorbing the change is to raise taxes by about a quarter, so GST becomes nearly 20 per cent and the top tax rate goes over 40 per cent, along with every other rate being increased by the same proportion. People embarking on their careers now would pay a 25 per cent extra “boomer tax” for being born at the wrong time.

There tends to be a bit of resistance to increasing tax rates, especially by this sort of amount.

Another alternative is extreme productivity growth, the private economy grows faster than ever for longer than ever, and public services become more efficient than ever. We basically trade our way out of this situation and become so rich we can afford all-you-can-eat pensions and healthcare for retiring boomers.

This is the Key/English gamble.

The problem is that pensions are tied to income so getting wealthier just increases the amount paid out.

The final option is to adjust pension entitlements. Follow Australia, the US, UK, Germany, Canada, to name a few, who have increased the retirement age so there are more workers and fewer pension recipients.

Seymour laments the lack of media coverage of the report and the predicted problems – but people have been shouting  about Super unaffordability for a long time, but politician’s ears are deaf to it.

John Key has torpedoed the debate by saying he’d rather resign than raise the pension age, effectively saying to his supporters: choose fiscal sustainability, or me. Labour and the Greens have followed suit, abandoning the policy after the last election. New Zealand First would rather serve yum cha at their party conference than debate the issue.

Almost every political leader is holding their hands up to their ears and chanting, “la la la la la.”

Peter Dunne tried to force a re-evaluation of Super in the last term of the current Government, proposing ‘flexi-super’, but English and Key looked like having no intention of  acting on the ‘discussion document’ that was done as part of their confidence and supply agreement with United Future.

If NZ First holds the balance of power after next year’s election there is now way Winston will allow any cutting back of Super payments for his primary constituency.

National under Key’s leadership is committed to kicking the Super can down the road.

Unless ACT gets a few more seats and is in a balance of power situation and forces National to do something?

That may be what Seymour is angling at.

To have any hope of success I think that Act and Seymour will have to promote Super change (not ‘discussion’) as a core election policy, and they will have to win enough seats to be able to force Key’s hand.

If Act succeeds in the election then the choice may be National+Act with Super reform, or National+NZ First with a booming Super budget with a risk of our economy blowing up (after Winston has retired or died so he won’t care).

I think Seymour has the gumption to have a go at this. Would he get enough support? Will younger people start to vote for Act to try to sort out their not so Super prospects?

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.

Labour staunch on raising Super age

Labour is promoting it’;s policy to raise the age of eligibility of National Superanuation again. RNZ reports:

Labour pushing later retirement age

The Labour Party is using the latest information on the state of the Government’s books to push its policy of gradually raising the retirement age to 67.

It’s not a retirement age. You can retire any age you choose.

It’s the age at which you become eligible for National Superannuation. Many people don’t retire when the become eligible, they receive Super while still earning an income.

If elected on 20 September, Labour would gradually phase in an increased retirement age of 67.

Anyone receiving a pension before 2020 would not be affected, but people turning 65 after 2020 would have to wait until they are 65 years and two months to get their entitlement. The retirement age would be raised by two months every year until it reaches 67.

Labour’s finance spokesperson David Parker says pension costs, which make up about half of all social spending, need to be addressed.

This would extend my eligibility age by two months. No big deal for me personally.

Ironically this policy is what many on the right think is essential but are up against a John Key wall of inaction, while some on the left will be spitting tacks again as they are strongly opposed to raising the Super age.

A past left wing discussion on the pros and cons of this Labour policy – The retirement age debate.

This would also be a no-go for any Labour-NZ First coalition agreement.

 

Standard retirement age discussion

A thoughtful and thought provoking post by mickysavage (Greg Presland) at The Standard on The retirement age debate:

Labour’s policy is to gradually change the age of retirement to 67 with an allowance made for those aged 65 who can no longer work. There are passionate views in support of this and opposing this.

Regrettably the financial analysis is quite clear. The current entitlement to superannuation will drain more and more of the state’s resources and Aotearoa will face a financial crisis in 10 years or so due to the baby boomer bubble approaching retirement.

Labour is trying to show that it is being fiscally responsible by highlighting this as an issue and proposing a realistic solution.

But it is a difficult line. There is policy that a 65 year old whose body is wrecked through work should be allowed to retire now. But allowing everyone to retire gracefully at the age of 65 years means that there will be jobs for 18 year olds to fill. Allowing older citizens to retire later means that there will be less jobs for our young

The debate really needs to be about how we share the resources of our society around. We need to make sure that those of us who are older can exit from the workforce with dignity and those of us who are younger can have jobs.

A commenter points out that Labour’s policy on Super has similarities to ACT’s.

Greg has close connections to David Cunliffe but says he blog comments on a personal basis – but here he seems to be trying to help the Super debate within Labour:

I thought that we should capture the thoughts in one post and let Labour (and the Greens and anyone else) to absorb the thoughts of commentators.

All parties and politicians should absorb whatever they can to try and work out an affordable way of dealing with Super. This must be done on an all party long term basis.

I’ll summarise comments in another post in a day or two.