Delegates: vote down the NZ Super age increase

• Colonial Viper
• 11 years ago
• Categories: labour, superannuation

Delegates at the Labour Party Conference in Christchurch will be asked to vote on cutting back NZ Superannuation entitlements as part of Labour’s 2014 policy platform. In my opinion, the response from the floor must be an unequivocal “NO WAY: find real alternatives.”

Delegates will need to stand firm against orthodox opinion, however, such as from:

• Retirement Commissioner Diane Maxwell who calls for the retirement age to increase to 68 for the sake of financial sustainability.
• David Parker, who repeats Labour’s current policy of raising the retirement age from 2020, saying that super will “cost” $30B p.a. by 2030. With due respect to both Maxwell and Parker, this “cost” to the Government is actually “income” for ordinary communities i.e. income which both Labour and the Retirement Commissioner are proposing to cut.
• Becky Prebble, Senior Treasury Analyst, who suggests that cuts should be considered, as super costs may increase to 8% of GDP by 2060. Prebble’s other statement that “taxes tend to damage economic growth” also needs pushback, but that can wait.
• An anonymous scribe at the NZ Herald replaying their broken record position that the age of entitlement must increase.

So while National is busy applying cuts today, Labour’s approach is to implement cuts tomorrow. Gen X and Gen Y will once again be asked to pay more than today’s 50-something and 60-something year old decision makers – who established themselves at a time of low cost housing, minimal youth unemployment and no student loans, and will now get their super on time in full with no policy offsets touching them. The phenomenon of intergenerational inequity can be emotive, but it is undeniable. Its further entrenchment by Labour is unwelcome. And we haven’t even considered the unequal impact that raising the super eligibility age has on Māori and Pasifika. For instance, under Labour’s plans, Māori men as a population can be expected to receive just 6 years of super before dying.

The current debate on super “sustainability” is also very narrow, being couched almost entirely in financial terms. Consider some alternative viewpoints:

• New Zealand is a currency sovereign. The Government cannot run out of the widely accepted IOUs (a.k.a. NZ dollars) used to pay NZ super. It can spend the dollars into existence when required, allow the IOUs to circulate in the economy and tax them back as needed.
• The Reserve Bank and Treasury has the ability to increase the Cullen Fund’s investment capital by an extra 0.2% per month through a combination of new dollars generated by key strokes and by taxation. This alone would take the age of entitlement issue off the table for decades.
• We already have too many people unable to find full time work in an economy geared to create too few jobs. Increasing an already excess pool of idle labour by asking people to retire later is a nonsense.

The Government has to develop a productive economy able to deliver on the complex expectations of a distinctly older population.  That is the real challenge, not balancing digital book keeping entries.  Will there be enough orthopaedic surgeons available to perform the needed hip replacements? How about sufficient low cost state rentals suitable for older people? Will public transport cater to the many elderly who can no longer drive (or afford to drive)? How exactly will relatively few younger people find the time and income to care for relatively many older people? An increasing percentage of New Zealand’s young are Māori and Pasifika: how do we justify asking more of them while allowing the social costs of rampant youth unemployment to continue year after year?

Labour’s 2011 election policy to raise the retirement age to 67 was highly unpopular amongst Labour supporters. Far from appealing to the illusory ‘fiscally responsible swing voter’ it turned off Labour voters in droves. It also delivered the unwelcome spectacle of John Key personally backing NZ Super, while Labour made excuses for why cuts should be made in the name of ‘fiscal responsibility.’  It was a sickening sight.

In 2011, this one policy probably cost Labour the 20,000 extra votes it needed to gain an additional MP. Today, having that single additional Labour MP in the House would be golden.

Conference delegates: force Labour to think outside the orthodox economic box. Vote down the proposed cuts to NZ Super. Tell Conference; “NO WAY: find real alternatives.”

by Tat Loo (CV)

Disclaimer: As usual, I speak for and represent only myself on The Standard.