It was with wry amusement I read Bill Ralston’s revisionist history of New Zealand superannuation today. According to Bill it was Muldoon who created an “unsupportable” super scheme as an election bribe in 1975. Of course anyone who remembers the situation (as Bill certainly should) knows full well that the real story was big Norm’s compulsory super scheme and the fact that Muldoon scrapped it in order to push cash into the pockets of voters in the face of what were looking to be, and indeed became, very dark economic times.
Over a year ago AYB discussed that super scheme and the fact that it would have provided for more than $280bn in investment capital for New Zealand today if it had been kept, so I won’t go into great detail about it but Muldoon’s scrapping of it was a truly grand political error that we are still paying the price for.
Bill Ralston may have got his facts wrong but that point in New Zealand’s economic history is one that is particularly pertinent as it is tomorrow that National will announce its tax cuts which are expected to be funded by cuts to the employer contribution to Kiwisaver. That would free up the $20 a week credit the government provides to employers for every worker in the scheme. An opportunist political decision made at our expense as we head into dark economic times. Sound familiar?
As I’ve written before cutting the employer contribution to Kiwisaver would cost an average worker with forty years of work ahead of them up to $190,000.
But the loss won’t just be to New Zealanders in Kiwisaver but to the businesses now and in the future that would have been able to access that capital.
In short it would be a move that sacrificed long-term stability and wealth for short-term political gain. Exactly the mistake Muldoon made over thirty years ago and one that Bryan Gaynor has described as our worst economic decision over the past 40 years.
We know Key has claimed an admiration of Rob Muldoon in the past but I can only hope that doesn’t extend to cutting a hole in New Zealand’s economic future just so he can save face on his over-hyped tax cut promises.
Because despite Marx’s claim history repeats itself first as tragedy and second as farce, I’d prefer if this particular piece of our history didn’t repeat itself at all.
Update: after re-reading this post this morning I’ve tightened the description of the outcome of Muldoon’s cutting of Kirk’s scheme to more accurately reflect its political implications.