Farce

Written By: - Date published: 10:01 pm, October 7th, 2008 - 18 comments
Categories: kiwisaver, tax - Tags:

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.

18 comments on “Farce ”

  1. Tane 1

    Word I heard was that the Nats were going to reduce the minimum employee contribution to 2% and halve the government contribution to a maximum of $10 a week. Of course, that’s just a rumour.

  2. randal 2

    and what about the 410,000 jobs…that pig didn,t fly.

  3. IrishBill 3

    Tane, assuming 700,000 workers in Kiwisaver, just cutting the employer contribution would free up $728m a year for National’s tax cuts and have the beneficial side-effect of letting their business support base off the hook for super payments.

    Of course workers get a 9% super contribution from employers in Aussie so a loss of all employer contributions here will make crossing the ditch an even more inviting prospect for Kiwi talent.

  4. Pascal's bookie 4

    If they are stupid enough to do this, Labour’s tv campaign ad’s pretty much write themselves.

  5. the sprout 5

    Ralston has become the new Garth George.
    It’s terrible what old age can do to a person.

  6. In Canada, the province of Alberta has charged a royalty on every barrel of oil pumped out of the ground or extracted from the tar sands. That royalty has gone into a “Heritage Fund” against the day when the oil runs out as it surely will.

    “As of June 30, 2008, the fair value of the Heritage Fund stood at $17.1 billion. Throughout its 32-year history, the Fund has generated approximately $30 billion in investment income that has improved the quality of life in the province.”

    The return on that fund allows Alberta to be the only province in Canada without a provincial sales tax. Albertans pay only the federal GST.

    There is nothing like savings to help a jurisdiction build wealth and prosperity…..which is why it is fascinating to the watch the party that would have us all believe it offers wealth and prosperity undermine saving and instead turn to borrowing.

    There is no doubt Kiwis are not savers. Most have incomes too low to allow them to save any significant amounts of capital out of cash on hand. Instead, they must rely on their homes appreciating in value as population grows over time. They don’t make land anymore, but we keep making more and more people every day.

    Cullen was doing a not-bad job at saving for all of us who can’t….and the usual squanderers rubbished him for it.

    Sad, really…..but there it is. The parties of the left have proven to be fiscally responsible and the parties of the Right want to pillage the piggy bank….bare though it is.

  7. deemac 7

    Rod Oram on Radio NZ today was carefully balanced but made it clear that he was as baffled as the rest of us by Key’s remarks today about tax cuts. When Oram said that no politician could “repeal the laws of arithmetic” it was obvious to me at any rate who he meant…

  8. According to Bill it was Muldoon who created an “unsupportable’ super scheme as an election bribe in 1975.

    Um, that’s true.

    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 pay for a series of election bribes in the face of what were looking to be, and indeed became, very dark economic times.

    Not true. As the Gaynor column you linked to explains, Muldoon’s scheme removed compulsory contributions from workers and employers and loaded the entire obligation onto the taxpayer. It cost money — heaps of it.

    But your contention is otherwise right: had Labour’s scheme been retained to the present day, New Zealand would be in a vastly better position, and far more in control of its economic destiny. And screwing KiwiSaver risks a repeat performance.

    Where Ralston is completely wrong is his claim that Muldoon’s scheme was “scrapped”. It wasn’t. It’s what we have today.

    IrishBill: My reading was that he was mistakenly talking about the Kirk fund because (as you point out) he described it as being scrapped and went on to draw parallels between it and Kiwisaver (a scheme much closer in nature to the Kirk fund than Muldoon’s superannuation scheme). Having read Bill’s post again I concede you may be right but it’s sufficiently lacking in clarity that it’s hard to tell if he has mixed his schemes up or if he’s just stretching the interpretation of the situation to create a tenuous and confused comparison.

  9. sean 9

    “An opportunist political decision made at our expense as we head into dark economic times. Sound familiar?”

    No – not at all, its actually a response to Cullen screwing the pooch and not having anything left out of the billions in surpluses that Labour so proudly parroted about.

    [lprent: They were only surpluses by one of the measurements used. When calculated with forward liabilities (ie super) then they were still deficits. Of course people like yourself only read the headlines.

    Besides the government wasn’t trumpeting the surpluses – that was coming from the pathetically short-term thinkers in the opposition]

  10. Ari 10

    No – not at all, its actually a response to Cullen screwing the pooch and not having anything left out of the billions in surpluses that Labour so proudly parroted about.

    Because he already spent it all on the tax cuts you were clamouring for so loudly?

    Come on, be fair.

  11. Spider_Pig 11

    You’re kidding right? National are likely to remove the employer contribution tax credit, not the employer contributions themselves. This will save the government $750 million pa, but not at all impact the overall contributions to employees Kiwisaver accounts.

    Employers will be placated by an ongoing lowering of the company tax rate and policies to improve productivity.

    I would have thought that stopping the handout to employers would have been right down The Standards alley?

  12. Paul 12

    Yeah what Russell said – I distinctly remember that election – Muldoon not only offered a better scheme from the point of view of voters but arguably a more socialistic one (the irony of which was certainly pointed out at the time) – it was also unsustainable in the long term

  13. jcuknz 13

    While I agree that Muldoon made a seriopus mistake from the Country’s point of view I personally am damm glad he did it becuase I now have my personal superanuation to help above the barely adequate national super us older folk get.

  14. Er

    I really like the Standard and most of the comments are spot on.

    I think that Ralston was talking about National Superannuation however which the nats brought in. Piggy Muldoon destroyed the Roger Douglas superannuation scheme and promised universal superannuation. It was unsustainabile, not funded, but the elderly loved it and this helped get him elected.

    9 years later we had a 9 billion deficit. Piggy called the 1984 election early because he was unable to write a choerent budget.

    Makes you realise how lucky we are under Helen!

    IrishBill: I think you might mean “Kirk’s” superfund.

    IrishBill: Actually, scratch that, I’d forgotten Douglas designed it! Probably the only decent thing he ever did in his life.

  15. Janet 15

    I had just started contributing to Norm Kirk and Labour’s compulsory NZ Super Scheme as a new worker when Muldoon came in and scrapped that NZ Super Scheme and just promised everyone super without having to pay for it in advance. So I got my contributions back. I put them in the PSIS which soon collapsed (although it was rescued and survived strongly).

    Those who don’t learn from history are really doomed to repeat it.

    I predict Key will have a go at the Cullen Fund, the ACC fund and Kiwisaver to pay for short term tax cuts.

    The other thing I remember about the 1975 election was the day after the election and the shock of Muldoon’s landslide win everyone was jolted into action and there was a huge revival and rejuvenation in the Labour Party and the left in the following years, so by 1978 Labour won more votes than National (but not more seats in the unfair FPP era). Also some huge political demonstrations were common place after Muldoon cut the public service and did other short sighted and dangerous things.

  16. Dom 16

    I wonder if National have underestimated how the public feel about Kiwisaver being tampered with – the same underestimation of how they felt about Kiwibank being sold…

  17. Oh it’s a farce alright… But one of those cruel and dark ones like something by Beckett…

Links to post

Recent Comments

Recent Posts

  • New Zealand’s minerals future
    Introduction Today, we are sharing a red-letter occasion. A Blackball event on hallowed ground. Today  we underscore the importance of our mineral estate. A reminder that our natural resource sector has much to offer.  Such a contribution will not come to pass without investment.  However, more than money is needed. ...
    BeehiveBy beehive.govt.nz
    11 hours ago
  • Government sets out vision for minerals future
    Increasing national and regional prosperity, providing the minerals needed for new technology and the clean energy transition, and doubling the value of minerals exports are the bold aims of the Government’s vision for the minerals sector. Resources Minister Shane Jones today launched a draft strategy for the minerals sector in ...
    BeehiveBy beehive.govt.nz
    11 hours ago
  • Government progresses Māori wards legislation
    The coalition Government’s legislation to restore the rights of communities to determine whether to introduce Māori wards has passed its first reading in Parliament, Local Government Minister Simeon Brown says. “Divisive changes introduced by the previous government denied local communities the ability to determine whether to establish Māori wards.” The ...
    BeehiveBy beehive.govt.nz
    14 hours ago
  • First RMA amendment Bill introduced to Parliament
    The coalition Government has today introduced legislation to slash the tangle of red and green tape throttling some of New Zealand’s key sectors, including farming, mining and other primary industries. RMA Reform Minister Chris Bishop says the Government is committed to  unlocking development and investment while ensuring the environment is ...
    BeehiveBy beehive.govt.nz
    15 hours ago
  • Speech to Employers and Manufacturers Association: Relief for today, hope for tomorrow
    Kia ora, Ngā mihi nui ki a koutou kātoa Tāmaki Herenga Waka, Tāmaki Herenga tangata Ngā mihi ki ngā mana whenua o tēnei rohe Ngāti Whātua ō Ōrākei me nga iwi kātoa kua tae mai. Mauriora. Greetings everyone. Thank you to the EMA for hosting this event. Let me acknowledge ...
    BeehiveBy beehive.govt.nz
    16 hours ago
  • Government invests in 1,500 more social homes
    The coalition Government is investing in social housing for New Zealanders who are most in need of a warm dry home, Housing Minister Chris Bishop says. Budget 2024 will allocate $140 million in new funding for 1,500 new social housing places to be provided by Community Housing Providers (CHPs), not ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • $24 million boost for Gumboot Friday
    Thousands more young New Zealanders will have better access to mental health services as the Government delivers on its commitment to fund the Gumboot Friday initiative, says Deputy Prime Minister Winston Peters and Mental Health Minister Matt Doocey.  “Budget 2024 will provide $24 million over four years to contract the ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Residential Tenancies Amendment Bill passes first reading
    The Coalition Government’s Residential Tenancies Amendment Bill, which will improve tenancy laws and help increase the supply of rental properties, has passed its first reading in Parliament says Housing Minister Chris Bishop. “The Bill proposes much-needed changes to the Residential Tenancies Act 1986 that will remove barriers to increasing private ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Montecassino Commemorative Address, Cassino War Cemetery
    Standing here in Cassino War Cemetery, among the graves looking up at the beautiful Abbey of Montecassino, it is hard to imagine the utter devastation left behind by the battles which ended here in May 1944. Hundreds of thousands of shells and bombs of every description left nothing but piled ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • First Reading – Repeal of Section 7AA of the Oranga Tamariki Act 1989
    I present a legislative statement on the Oranga Tamariki (Repeal of Section 7AA) Amendment Bill Mr. Speaker, I move that the Oranga Tamariki (Repeal of Section 7AA) Amendment Bill be now read a first time. I nominate the Social Services and Community Committee to consider the Bill. Thank you, Mr. ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • First reading of 7AA’s repeal: progress for children
    The Bill to repeal Section 7AA of the Oranga Tamariki Act has had its first reading in Parliament today. The Bill reaffirms the Coalition Government’s commitment to the care and safety of children in care, says Minister for Children Karen Chhour.  “When I became the Minister for Children, I made ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • China Business Summit 2024
    Kia ora koutou, good morning, and zao shang hao. Thank you Fran for the opportunity to speak at the 2024 China Business Summit – it’s great to be here today. I’d also like to acknowledge: Simon Bridges - CEO of the Auckland Chamber of Commerce. His Excellency Ambassador - Wang ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Assisted depatures from New Caledonia
    Foreign Minister Winston Peters has confirmed a New Zealand Government plane will head to New Caledonia in the next hour in the first in a series of proposed flights to begin bringing New Zealanders home.    “New Zealanders in New Caledonia have faced a challenging few days - and bringing ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Assisted departures from New Caledonia
    Foreign Minister Winston Peters has confirmed a New Zealand Government plane will head to New Caledonia in the next hour in the first in a series of proposed flights to begin bringing New Zealanders home.  “New Zealanders in New Caledonia have faced a challenging few days - and bringing them ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government to rollout roadside drug testing
    The Coalition Government will introduce legislation this year that will enable roadside drug testing as part of our commitment to improve road safety and restore law and order, Transport Minister Simeon Brown says.  “Alcohol and drugs are the number one contributing factor in fatal road crashes in New Zealand. In ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Minister responds to review of Kāinga Ora
    The Government has announced a series of immediate actions in response to the independent review of Kāinga Ora – Homes and Communities, Housing Minister Chris Bishop says. “Kāinga Ora is a large and important Crown entity, with assets of $45 billion and over $2.5 billion of expenditure each year. It ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Pseudoephedrine back on shelves
    Associate Health Minister David Seymour is pleased that Pseudoephedrine can now be purchased by the general public to protect them from winter illness, after the coalition government worked swiftly to change the law and oversaw a fast approval process by Medsafe. “Pharmacies are now putting the medicines back on their ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • New Zealand-China Business Summit
    Tēnā koutou katoa. Da jia hao.  Good morning everyone.   Prime Minister Luxon, your excellency, a great friend of New Zealand and my friend Ambassador Wang, Mayor of what he tells me is the best city in New Zealand, Wayne Brown, the highly respected Fran O’Sullivan, Champion of the Auckland business ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • New measures to protect powerlines from trees
    Energy Minister Simeon Brown has announced that the Government will make it easier for lines firms to take action to remove vegetation from obstructing local powerlines. The change will ensure greater security of electricity supply in local communities, particularly during severe weather events.  “Trees or parts of trees falling on ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Wairarapa Moana ki Pouakani win top Māori dairy farming award
    Wairarapa Moana ki Pouakani were the top winners at this year’s Ahuwhenua Trophy awards recognising the best in Māori dairy farming. Māori Development Minister Tama Potaka announced the winners and congratulated runners-up, Whakatōhea Māori Trust Board, at an awards celebration also attended by Prime Minister Christopher Luxon and Finance Minister ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • DJ Fred Again – Assurance report received
    "On the 27th of March, I sought assurances from the Chief Executive, Department of Internal Affairs, that the Department’s correct processes and policies had been followed in regards to a passport application which received media attention,” says Minister of Internal Affairs Brooke van Velden.  “I raised my concerns after being ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • District Court Judges appointed
    Attorney-General Judith Collins has announced the appointment of three new District Court Judges, to replace Judges who have recently retired. Peter James Davey of Auckland has been appointed a District Court Judge with a jury jurisdiction to be based at Whangarei. Mr Davey initially started work as a law clerk/solicitor with ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Unions should put learning ahead of ideology
    Associate Education Minister David Seymour is calling on the Post Primary Teachers’ Association (PPTA) to put ideology to the side and focus on students’ learning, in reaction to the union holding paid teacher meetings across New Zealand about charter schools.     “The PPTA is disrupting schools up and down the ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Craig Stobo appointed as chair of FMA
    Commerce and Consumer Affairs Minister Andrew Bayly today announced the appointment of Craig Stobo as the new chair of the Financial Markets Authority (FMA). Mr Stobo takes over from Mark Todd, whose term expired at the end of April. Mr Stobo’s appointment is for a five-year term. “The FMA plays ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Budget 2024 invests in lifeguards and coastguard
    Surf Life Saving New Zealand and Coastguard New Zealand will continue to be able to keep people safe in, on, and around the water following a funding boost of $63.644 million over four years, Transport Minister Simeon Brown and Associate Transport Minister Matt Doocey say. “Heading to the beach for ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • New Zealand and Tuvalu reaffirm close relationship
    New Zealand and Tuvalu have reaffirmed their close relationship, Foreign Affairs Minister Winston Peters says.  “New Zealand is committed to working with Tuvalu on a shared vision of resilience, prosperity and security, in close concert with Australia,” says Mr Peters, who last visited Tuvalu in 2019.  “It is my pleasure ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand calls for calm, constructive dialogue in New Caledonia
    New Zealand is gravely concerned about the situation in New Caledonia, Foreign Minister Winston Peters says.  “The escalating situation and violent protests in Nouméa are of serious concern across the Pacific Islands region,” Mr Peters says.  “The immediate priority must be for all sides to take steps to de-escalate the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand welcomes Samoa Head of State
    Prime Minister Christopher Luxon met today with Samoa’s O le Ao o le Malo, Afioga Tuimalealiifano Vaaletoa Sualauvi II, who is making a State Visit to New Zealand. “His Highness and I reflected on our two countries’ extensive community links, with Samoan–New Zealanders contributing to all areas of our national ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Island Direct eligible for SuperGold Card funding
    Transport Minister Simeon Brown has announced that he has approved Waiheke Island ferry operator Island Direct to be eligible for SuperGold Card funding, paving the way for a commercial agreement to bring the operator into the scheme. “Island Direct started operating in November 2023, offering an additional option for people ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Further sanctions against Russia
    Foreign Minister Winston Peters today announced further sanctions on 28 individuals and 14 entities providing military and strategic support for Russia’s invasion of Ukraine.  “Russia is directly supported by its military-industrial complex in its illegal aggression against Ukraine, attacking its sovereignty and territorial integrity. New Zealand condemns all entities and ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • One year on from Loafers Lodge
    A year on from the tragedy at Loafers Lodge, the Government is working hard to improve building fire safety, Building and Construction Minister Chris Penk says. “I want to share my sincere condolences with the families and friends of the victims on the anniversary of the tragic fire at Loafers ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pre-Budget speech to Auckland Business Chamber
    Ka nui te mihi kia koutou. Kia ora and good afternoon, everyone. Thank you so much for having me here in the lead up to my Government’s first Budget. Before I get started can I acknowledge: Simon Bridges – Auckland Business Chamber CEO. Steve Jurkovich – Kiwibank CEO. Kids born ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand and Vanuatu to deepen collaboration
    New Zealand and Vanuatu will enhance collaboration on issues of mutual interest, Foreign Minister Winston Peters says.    “It is important to return to Port Vila this week with a broad, high-level political delegation which demonstrates our deep commitment to New Zealand’s relationship with Vanuatu,” Mr Peters says.    “This ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Penk travels to Peru for trade meetings
    Minister for Land Information, Chris Penk will travel to Peru this week to represent New Zealand at a meeting of trade ministers from the Asia-Pacific region on behalf of Trade Minister Todd McClay. The annual Asia-Pacific Economic Cooperation (APEC) Ministers Responsible for Trade meeting will be held on 17-18 May ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister attends global education conferences
    Minister of Education Erica Stanford will head to the United Kingdom this week to participate in the 22nd Conference of Commonwealth Education Ministers (CCEM) and the 2024 Education World Forum (EWF). “I am looking forward to sharing this Government’s education priorities, such as introducing a knowledge-rich curriculum, implementing an evidence-based ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Education Minister thanks outgoing NZQA Chair
    Minister of Education Erica Stanford has today thanked outgoing New Zealand Qualifications Authority Chair, Hon Tracey Martin. “Tracey Martin tendered her resignation late last month in order to take up a new role,” Ms Stanford says. Ms Martin will relinquish the role of Chair on 10 May and current Deputy ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Joint statement of Christopher Luxon and Emmanuel Macron: Launch of the Christchurch Call Foundation
    New Zealand Prime Minister Christopher Luxon and President Emmanuel Macron of France today announced a new non-governmental organisation, the Christchurch Call Foundation, to coordinate the Christchurch Call’s work to eliminate terrorist and violent extremist content online.   This change gives effect to the outcomes of the November 2023 Call Leaders’ Summit, ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Panel announced for review into disability services
    Distinguished public servant and former diplomat Sir Maarten Wevers will lead the independent review into the disability support services administered by the Ministry of Disabled People – Whaikaha. The review was announced by Disability Issues Minister Louise Upston a fortnight ago to examine what could be done to strengthen the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister welcomes Police gang unit
    Today’s announcement by Police Commissioner Andrew Coster of a National Gang Unit and district Gang Disruption Units will help deliver on the coalition Government’s pledge to restore law and order and crack down on criminal gangs, Police Minister Mark Mitchell says. “The National Gang Unit and Gang Disruption Units will ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand expresses regret at North Korea’s aggressive rhetoric
    Foreign Minister Winston Peters has today expressed regret at North Korea’s aggressive rhetoric towards New Zealand and its international partners.  “New Zealand proudly stands with the international community in upholding the rules-based order through its monitoring and surveillance deployments, which it has been regularly doing alongside partners since 2018,” Mr ...
    BeehiveBy beehive.govt.nz
    1 week ago

Page generated in The Standard by Wordpress at 2024-05-23T18:53:54+00:00