Thursday 15th of April 2004

I should also mention superannuation. The Superannuation Fund is an important mechanism for maintaining future financial stability. We remain absolutely firm on our commitment to New Zealanders of all ages to provide a basic income in retirement. We believe that is a fundamental expression of the wishes of New Zealanders to have a fair and inclusive society, rather than one which allows extremes of poverty and wealth amongst the older generations. Pre-funding this commitment allows us to smooth out the future fiscal cost of the scheme, and reduces the need for sharp increases in taxation when the demographic bulge begins to hit in around 15 years time. This is simple prudence. It is about managing known future contingencies. To fail to take some action would be irresponsible. Dr Brash has consistently vowed to put an end to pre-funding and to spend the reserves through tax cuts. Since one assumes he would be loath to contemplate tax increases in future to pay for super, his policy has to imply cuts to New Zealand superannuation, either by reducing the level of payment or increasing the age of eligibility or both. On this point he has been very coy, promising to those over 50 that nothing will change, and to those in their twenties that they will be cut loose to fend for themselves. Exactly where his restrictions to super will cut in, and for whom, he won’t say. What is certain, however, is that he will have to make those cuts and they will have to be severe. And if he expects younger New Zealanders to continue to pay taxes to fund a superannuation scheme that they will be locked out of, he will be inviting some kind of voter revolt.