The political response to our unsustainable New Zealand Superannuation reads like a hall of shame for incompetent economic management. Our Establishment Parties are just incapable of showing any leadership and dealing with long term issues.
First it was National with another of its no policy announcements, this time on NZ Superannuation by saying it won’t do anything for the foreseeable future. Instead it will commit some future government to increasing the age of eligibility once the last Babyboomer is 76. Bill English claims the change will save $4b per year, but by 2040 that will be chump change. Their lift in the eligibilty age will be too little, too late. Further reform will be needed, probably before National’s reform even kicks in.
Next up Winston Peters came up with some arithmetic garbage that pretended that NZ Super is sustainable anyway. By doubling GDP Winston claims that we could halve the Super bill. He neglected to give a plan on how to double GDP, and didn’t realise that NZ Super is linked to income, so would double too.
And the latest party to join the crazy club is Labour. Having already abandoned its previous policy of moving the age up to 67, their leader Andrew Little is now arguing against the policy his party ran for the last 2 elections. He is concerned that manual workers may struggle to work the additional 2 years, which is a fair point. His alternative is rekindling payments to the Cullen Fund.
The trouble is that Little’s plan won’t solve the issue, any more than Bill English’s will. The cost of NZ Super is rising continuously into the future. If something is unaffordable, it doesn’t matter how much you save for it, that is never going to change. Little’s plan is the equivalent of telling a renter in Auckland to save for a deposit for a house by not drinking so many latte’s. It is condescending in the extreme.
On current projections, by 2060 NZ Super will still be soaking up 8c in every dollar we earn, and government debt will have ballooned to twice national income. The problem isn’t just the large numbers of baby boomers, it is that everyone is living longer. To fix that problem you need some combination of the following policy changes:
- continually raise the age of eligibility (e.g. by tying it to increasing life expectancy) to limit the number of years people can get it;
- means testing so that the rich don’t recieve as much; and/or
- indexing NZ Super to inflation rather than wages so we can grow the economy in order to pay the bill.
Here’s the punchline: No political parties are talking about any of these options.
Both National and Labour’s plans don’t acknowledge that NZ Superannuation is fundamentally unsustainable by design; they simply push dealing with the problem out by a few years. NZ First has their head in the sand. The Maori Party have (rightly) called for an exemption from the higher eligibility age for Maori, given that they don’t live as long as Pakeha. Sadly they too have no plan to deal with the issue of rising super cost.
One thing is terribly clear here. The Establishment politicians with their career politicians simply will not do anything about NZ Superannuation - lest those career prospects suffer. Meanwhile the younger generations are getting screwed, and screwed badly.
They are looking down the barrel at funding the retirement nirvana of more and more baby boomers. At the same time they have to pay off their student loan, pay a lifetime of rent to their baby boomer landlords, and save for their own retirement. Oh, and while they are at it they are expected to clean up the environmental mess that the retired generation has left – wadeable rivers and rampant greenhouse gas emissions. It is only a matter of time before younger generations throw down their tools in disgust at the impossible burden they are being asked to bear.
Many of these elders, myself included, simply don’t need the money, but we will take it because as a generation we refuse to be responsible and get our heads out of the trough. Meanwhile our kids and in particular our grandkids who have to pay the bill for the pig-out that these Establishment parties simply don’t have the bottle to address.
We can conclude with certainty that neither National, Labour nor NZ First give a hoot about the well-being of voters under age 48. They are in a race to capture the elder and near-elder vote and screw the rest. It is the ultimate in pork barrel politics, and will only shift when Gen X, Gen Y and the Millennials wake up to their collective power and wield it at the ballot box. Together they have the voter numbers already – pity they don’t turn up on voting day with the same enthusiasm those of us getting something for nothing do.