Superannuation
Jim's E-News, February 2011
18/02/11 15:29 Filed in: Newsletters
Key short on answers to economy
Parliament resumed earlier this month and in my first speech for the year, I questioned whether John Key’s words about ‘aspirational’ government and his pledges for progress and prosperity for the nation were nothing more than the rhetoric we heard after the Canterbury earthquakes. Lots of hype, but little action!
Here are the problems that Mr Key faces: After more than two years of his government, economic growth has stopped. Any so-called recovery has stalled. Unemployment is going up, not down, with youth unemployment going through the roof. Jobs are being lost, not created. The cost of living is increasing, but incomes aren’t keeping pace, particularly for low to middle income New Zealanders.
You might ask what the Prime Minister’s strategy is to tackle those problems. The answer is that he doesn’t have one. His economic policy consists of asset sales. That is not an economic policy: It is a surrender of the sovereignty of New Zealand. Not one new job will be created by selling-off the people’s power companies, but every one of us will be paying higher power bills to the new overseas owners. We know this because we’ve seen it all before.
The National Party says selling assets will pay off debt. That is exactly what was said in the eighties by Roger Douglas. It’s what was said in the nineties by the National Government, and we all know what happened. We became worse off.
Mr Key says the assets will be kept in New Zealand hands. That is what they said about Contact Energy, the Bank of New Zealand, Postbank, Air New Zealand, NZ Rail and practically every other strategic asset which was privatised. And it was nonsense.
Who owns those assets now? Not the Kiwi mums and dads Mr Key talks about. The majority interests (apart from those the last Labour-led government bought back) are mainly held in Australia.
It doesn’t take too much analysis to work out that, if there is a debt crisis and the country is borrowing too much, the $43 million a week given by the National Government in tax cuts to the top ten per cent of income earners last year would have gone a considerable way to fixing the problem.
My speech to Parliament can be found here.
Victory over DB Export ad
The Advertising Standards Authority has ruled in favour of my complaint against the DB Export beer advertising campaign, agreeing with me that the presentation of film footage from the 1951 waterfront lockout riots as portraying civil unrest in response to Finance Minister Arnold Nordmeyer’s 1958 Budget was wrong and misleading. As a result, the Authority has requested that the ads in their present form be withdrawn.
The ads, set in the time of the so-called ‘Black Budget’, portray Nordmeyer as a tight-fisted old bore who taxed beer to the extent that working men could no longer afford to drink. In what was then a distortion of epic proportion, the ad went on to show archive footage of men rioting, ostensibly over the price of beer, when in fact the footage was from the 1951 waterfront lockout.
The Complaints Board agreed that footage used in the advertisements was ‘demonstrably false’ and it considered ‘the execution of ‘documentary type’ style, contrasting black and white screen-shots and accompanying authoritative narration coupled with actual footage of riots (from a different historical event) gave the impression that the advertisements were portraying a credible and realistic depiction of history’.
The Board also decided that the advertisements ‘went too far and the likely consumer conclusion was that the account portrayed in the advertisements was an accurate depiction of history, when it was no such thing’.
This ad went further than just distorting history; it was deliberately making barbed threats to politicians that any increase in the tax on beer would be met by brewing companies spending tens of millions dollars to attack them. It was no accident these ads were made at the very time the Law Commission was looking at reforming liquor legislation, including by having tighter controls over its advertising.
This shows just how far the liquor industry will go and how dishonestly they will act to protect and promote their products.
My press release can be found here.
There is more coverage on 3 News and in the Herald.
End link between alcohol and sport
Earlier this month, I spoke to the ‘Sport and Alcohol: Finding the Balance’ conference at Massey University, calling for an end to the sponsorship of sport by alcohol companies. My message was that normalising the association between beer and sport sends all the wrong messages, just as it did with the links between tobacco companies and sporting bodies in the past.The three day conference, which was sponsored by ALAC in association with Massey University, looked at a wide variety of issues, including the alcohol industry and hazardous drinking among sports people, the effects of alcohol on sport and the changing face of sports and alcohol-related culture. Interestingly, and perhaps not surprisingly, representatives of the liquor industry were nowhere to be seen.
By citing examples of the methods used by the alcohol industry to link sport and alcohol, from sponsorship at junior club level to corporate hospitality and sponsorship of sporting stars, I was able to show that even the youngest players are in no doubt that beer is an integral part of sport in New Zealand.
You have to look no further than the All Blacks to see this, with beer branding liberally plastered over their playing outfits, promotional material and almost every piece of memorabilia. The marketers know that youngsters like to emulate their All Black heroes and exploit this as much as they can. What they are doing by targeting the young is creating customers for life.
I told the conference that, as long as brewers continue to have an association with sport, there is no way of changing New Zealand’s heavy drinking culture. And by associating with sporting brilliance the alcohol industry sells more beer, and the brewers laugh all the way to the bank.
Many sporting bodies will tell us they would not survive without sponsorship from liquor companies, but that it not true. They said the same when tobacco sponsorship became prohibited; cricket was traditionally sponsored by tobacco companies but what then happened was that others, including the National Bank, stepped in. The same can happen now with liquor sponsorship. What it may require is some assistance from Government to enable that to happen. That would be a good investment.
My speech to the Massey conference can be found here.
There’s more at TVNZ and here.
Quake recovery exposes lack of strategy
A week ago I held a meeting for business owners in my local suburbs of Sydenham and Beckenham with representatives from the Christchurch City Council. Five months after the first earthquake, many of those business owners are frustrated over the lack of progress and the absence of a strategy from Council and Government giving any direction for the recovery.Worse than that, in the five months since the earthquake, the local members of parliament and even city councillors have never been briefed by the Mayor or Chief Executive, and getting accurate and timely information from council officers has proved almost impossible. That is despite the Labour MPs and me working tirelessly with residents and business owners throughout. Ironically, my office was phoned recently on a Friday afternoon to tell us that such a meeting was being held this month - just hours before
The Press published a report quoting the Mayor as saying he had scheduled such a meeting.
It is difficult for those outside Christchurch to comprehend the problems the city still faces. Despite the Mayor intimating that life has returned to normal and it is ‘business as usual’, Colombo Street in Sydenham still has cordons out onto the roadway restricting access and rubble remains lying on the street in many places. Across the road from my electorate office, an entire block of shops remain cordoned off and no-one appears to have any idea about when decisions will be made to repair or demolish the buildings, and no one seems to take responsibility or show leadership.
I told the Council officials that, at no time in my public life, have I seen such a lack of leadership and failure to take responsibility. Without leadership, those shops may still be there in five years’ time with still no one the wiser about their fate.
If there has been a positive in the last few weeks, it has been first-term city councillor Tim Carter calling on the Council to establish an earthquake committee. Similarly, The Press now appears to be running a campaign to get some sort of leadership, and these things, along with our pushing, appears to have prompted some action.
Tribute to Tom Newnham
Just before Christmas I had the privilege of speaking at the funeral of Tom Newnham. Tom is perhaps best known for his opposition to racism and for promoting racial and economic justice on the national and international stage, he was a leader of CARE, the Citizens’ Association for Racial Equality, and one of New Zealand’s leading anti-Springbok tour activists.Tom was a one-off human being. He attacked institutional racism in New Zealand and around the world with an intellectual ferocity without equal. He spoke fluent Cantonese and Mandarin. As a prominent educationalist, he wasn’t easy on himself and even took some personal blame as a curriculum advisor for the remarkable lack of knowledge which most New Zealanders have of the history of their own country.
Tom was also an integral part of the story of Centre-Left politics, being involved in the Labour Party in Mt Eden, the NewLabour Party and the Alliance following the Rogernomics revolution. I was never more proud then when Tom wrote to tell me he was joining the fight back against Rogernomics.
For Tom, social justice was a way of life, a movement continually to be sought and perfected, but he was never locked in to a narrow ideology. Not for him the name calling and character assassination so common to many of his opponents, he always recognised the potential for change in an adversary and the possibility of winning over an opponent.
Tom was a great new Zealanders and a unique human being.
NZ Superannuation, a manufactured crisis?
If ever an opportunity was lost, it was the failure of the Government’s Savings Working Group (SWG) to look at the issue of superannuation, particularly given Retirement Commissioner, Dianne Crossan’s recent report that the New ZealandSuperannuation (NZS) is unaffordable in the long term. She advocates lifting the age of entitlement from 2020, introducing a transitional means-tested benefit for 65 year-olds and effectively reducing the level of NZS against the average wage.
One of Crossan’s presumptions is that it is solely young taxpayers who fund NZS and that, as the population gets older, there will be fewer working young people paying tax to maintain an increasing number of superannuitants. That argument overlooks that many superannuitants still work and pay income tax, and neglects to take into account that superannuation itself is taxable or that every time superannuitants spend money, 15 per cent is taken as GST.
Another flaw in the argument that NZS is unsustainable is the assumption that it is paid only from taxpayer income, whereas in fact it is funded from the consolidated fund or general pool of government revenue. Similarly, it assumes that the economy will not grow at anything other than current levels, thus we will have to slice the economic cake more thinly to be able to afford to pay for NZS. There is no consideration of the potential for economic growth.
Against Crossan’s assertions, it could be argued that tax reform could ensure a decent standard of living for superannuitants?
What if National’s recent cut tax rates were reversed, allowing the $4 billion a year to be invested in the NZS fund? Surely that would go a considerable way to ensuring its sustainability.
Making it more difficult to qualify for NZS either by reducing the entitlement or raising the age of eligibility lacks both imagination and creativity, and I will be raising these issues this year to ensure that the real value of NZS is not diminished by a manufactured crisis.
How does cutting top tax rate cut make super more affordable?
04/05/10 16:32 Filed in: News Releases
Planned cuts in the top rate of tax weaken the ability of the government to continue to provide universal superannuation in the way all parties agreed to in the New Zealand Superannuation Accord, Progressive Party MP Jim Anderton says.
He has released the Progressive Party’s submission to the 2010 New Zealand Superannuation Retirement Income Review today.
Jim Anderton was one of the signatories of the 1993 Superannuation Accord that aimed to provide long-term stability to superannuation.
The main principle agreed to by all parties was that ‘the net amount provided from public funds for a retired person should reduce as that person’s total income increases’.
That principle could be met by a surcharge on superannuation or by a progressive income tax scale.
“If the National Government makes income tax less progressive in this budget by reducing the top personal income tax rate, then how is it going to meet the Accord principle that ‘the net amount provided from public funds for a retired person should reduce as that person’s total income increases’?
“Either National will ultimately reduce entitlement to superannuation, or it no longer believes that the amount provided from public funds should decrease as a person’s income increases. If it is the latter, then National will be solely to blame if it tries to say the cost of superannuation is unsustainable. Alternatively, if it is ultimately planning to cut publicly provided retirement incomes, then people deserve to be told.”
Jim Anderton’s submission shows that continuing New Zealand Superannuation at age 65, indexed to wages, is sustainable for the long term provided the government sticks to Accord principles.
“The future cost of super is affordable, but the government needs to keep the means to afford it”, Jim Anderton said.
He has released the Progressive Party’s submission to the 2010 New Zealand Superannuation Retirement Income Review today.
Jim Anderton was one of the signatories of the 1993 Superannuation Accord that aimed to provide long-term stability to superannuation.
The main principle agreed to by all parties was that ‘the net amount provided from public funds for a retired person should reduce as that person’s total income increases’.
That principle could be met by a surcharge on superannuation or by a progressive income tax scale.
“If the National Government makes income tax less progressive in this budget by reducing the top personal income tax rate, then how is it going to meet the Accord principle that ‘the net amount provided from public funds for a retired person should reduce as that person’s total income increases’?
“Either National will ultimately reduce entitlement to superannuation, or it no longer believes that the amount provided from public funds should decrease as a person’s income increases. If it is the latter, then National will be solely to blame if it tries to say the cost of superannuation is unsustainable. Alternatively, if it is ultimately planning to cut publicly provided retirement incomes, then people deserve to be told.”
Jim Anderton’s submission shows that continuing New Zealand Superannuation at age 65, indexed to wages, is sustainable for the long term provided the government sticks to Accord principles.
“The future cost of super is affordable, but the government needs to keep the means to afford it”, Jim Anderton said.
Piggies raid bank
25/02/09 13:26 Filed in: News Releases
John Key’s failure to give an assurance about the Superannuation Fund means he cannot honour his pre-election promise not to change superannuation, Wigram’s Progressive MP Jim Anderton says.
“Raiding the piggy bank today means there is less in the piggy bank when it is needed.
“If the Super Fund is reduced in any way, then our future ability to pay for superannuation at existing levels is reduced. If it is cut then significantly higher taxes in future than we would otherwise have are inevitable, or alternatively reduced levels of superannuation in the future will be the certain result.
“There is no easy option. National makes pledges about super today, but that is meaningless because they are setting up super to be cut in the future. Future superannuation will not be paid for out of thin air. Whatever is taken out of the Fund today by way of ‘freezes’ or ‘reduced contributions’ is money not available to pay for super in the future.
“Cut the fund today, and the payout will be cut in future.
“National was repeatedly challenged to come clean on this before the election and it repeatedly gave an undertaking that superannuation would be unchanged.
"I specifically warned that National would use ‘changed circumstances’ as an excuse - but circumstances always change. Once again, just like it did last time in government, National is breaking its promise and finding a creative new way to break its promise not to cut super.”
“Raiding the piggy bank today means there is less in the piggy bank when it is needed.
“If the Super Fund is reduced in any way, then our future ability to pay for superannuation at existing levels is reduced. If it is cut then significantly higher taxes in future than we would otherwise have are inevitable, or alternatively reduced levels of superannuation in the future will be the certain result.
“There is no easy option. National makes pledges about super today, but that is meaningless because they are setting up super to be cut in the future. Future superannuation will not be paid for out of thin air. Whatever is taken out of the Fund today by way of ‘freezes’ or ‘reduced contributions’ is money not available to pay for super in the future.
“Cut the fund today, and the payout will be cut in future.
“National was repeatedly challenged to come clean on this before the election and it repeatedly gave an undertaking that superannuation would be unchanged.
"I specifically warned that National would use ‘changed circumstances’ as an excuse - but circumstances always change. Once again, just like it did last time in government, National is breaking its promise and finding a creative new way to break its promise not to cut super.”
Budget 2009 Speech
28/05/09 12:30 Filed in: Speeches
This is a budget that has all the competence that you would expect from the people responsible for Melissa Lee’s Mt Albert by-election campaign.
The good news: Inflation is no longer a problem. We have finally got the low inflation economy the National Party always said would deliver us its dream economy. How’s that working out now?
National has produced a lacklustre budget that Bill Birch would have been proud of.
In troubled times, when the economy is rocking on the waves of global economic storms, the government has responded weakly.
Not with a vision for the future.
Not with bold steps that will lead New Zealand on a developmental path.
But with a weak, uncertain, sitting on their hands response.
Governments around the world are investing in the future.
This one has slashed the future.
This one is the Broken Promise budget.
The total value of primary sector science investment falls from $2 billion in NZ Fast Forward under the last government to as little as $1.2 billion now.
It is cutting nearly as much out of science and research in the primary sector as it is investing in infrastructure.
Government spending on science and research, on a like for like basis, falls from around a billion government dollars in the NZ Fast Forward Fund, to $610 million in National’s replacement.
With matching private sector funding, the total investment in primary sector research and development falls by $800 million, or about 0.4 per cent of GDP.
In addition, the government has not replaced a cent of the cancelled research and development tax credit.
This is huge cut in science and research.
It is a disaster for the future of New Zealand’s economy.
It is a disaster for the future of our most important economic sector.
Other developed countries are preparing themselves to come out of this recession stronger.
New Zealand is preparing by switching from science and research to poltergeists and UFOs.
The government promised the primary sector it would spend more on science and research.
That is what David Carter repeatedly promised.
He promised it as recently as this year.
Farmers and our agri businesses will be looking it up.
And they will find not increases, but cuts.
It has broken that promise as surely as if it has broken its promise on personal taxes.
I want to turn to some other features of this disappointing budget.
I want to draw the House’s attention to the table on Page 55 of the fiscal strategy report.
In there the government points to its expected increases in nominal average wages over the next four years.
If you deduct those from the CPI – the cost of living index - there will be no increases in real wages for four years.
No increase in real wages for four years!
This is the curious branch of economics that says the way to make New Zealand better off is to make everyone worse off.
Not since the eighties have we had an economy that didn’t increase real wages for four consecutive years.
It’s hardly conducive to keeping working New Zealanders here.
If they were leaving before, wait until John Key’s policies result in no increase in real wages for four years.
I have to give the National party credit for one thing.
There was a time in the past when National would have said the way to fix that would be to spend up on tax cuts.
At least Bill English and John key have now accepted that tax cuts do not stimulate the economy.
But that is not what they said when they wanted to get elected.
They promised New Zealanders tax cuts.
They now say they can’t afford them. Fair enough. But that’s not what they said when they wanted a vote.
Back then they said their promises took into account the worsening economic climate.
Back then they said
“National has structured its economic package to take account of the changing international climate.”
They weren’t telling the truth when they made the promises that got them elected.
They said: “Our tax cut programme will not require any additional borrowing”.
They weren’t telling the truth when they made the promises that got them elected.
The only way that promise could have been true is if his tax policy wouldn’t require borrowing because it was never going to go ahead anyway - and John Key knew that even before the election
Last year John Key said his tax policy was "appropriate for the current conditions" and would require "no additional borrowing.”
There is no excuse for this.
John Key was here in the eighties and he was here in the nineties when governments got elected and immediately tossed out the promises they got elected on.
I was in here in 1991.
I remember the Bolger government got away with the 1991 budget to begin with.
People gave them the benefit of the doubt that the economy had been wrecked by Roger Douglas and needed hard measures.
But over time it was a disaster.
This one will be too.
Those tax cuts needed to be cancelled.
But they should never have been promised in the first place.
John Key owes New Zealand an apology for getting himself elected on a promise that could never have been kept.
Did he know before the election that the international economic situation was deteriorating, or did he only find out when the Treasury told him?
Neither possible answer reflects well on his fitness to lead a country through a crisis.
I want to turn in the time left to the cuts to the Super Fund.
This is very sneaky politics.
Cutting the Super Fund now reduces the ability of any government in the future to provide for super at anything like existing rates or retirement age.
So what Bill English is doing is pushing out by ten years the hard decisions about the huge tax increases or cuts to super that will be needed to make super affordable.
He has calculated he won’t be finance minister in ten years.
He is right about that!
After this budget he won’t be finance minister in three years.
But he has delivered an enormous burden to future taxpayers.
The affordability of superannuation in the future must decline because we are no longer putting aside something now to pay for some of it in the future.
It was going to pay for around fifteen percent of the future cost.
Now it will pay for less than seven per cent.
That means the age of eligibility for superannuation will be increased to around 67; or else there will be huge tax increases required to pay for it.
That is the doozy the government has announced today.
This is not a budget that prepares New Zealand for the challenges of the future.
There is not a word in here about preparing New Zealand for the effects of climate change.
The Green party will be disappointed that the sum put aside for home insulation has been slashed from a billion dollars to $244 million.
Then we look over at the infrastructure spend, and we can see that the government is shifting $258 million of spending from rail to roads.
So this is what the Greens have got for their cooperation deal with the National party.
They have actually lost money!
They have lost $14 million!
Then what about the Maori party?
Who do they think is going to be hardest hit by this recession?
The National party is not doing anything for new jobs, and the Maori Party is voting for that!
At least Pita Sharples can wave at the unemployed as he drives by in his new car.
The good news: Inflation is no longer a problem. We have finally got the low inflation economy the National Party always said would deliver us its dream economy. How’s that working out now?
National has produced a lacklustre budget that Bill Birch would have been proud of.
In troubled times, when the economy is rocking on the waves of global economic storms, the government has responded weakly.
Not with a vision for the future.
Not with bold steps that will lead New Zealand on a developmental path.
But with a weak, uncertain, sitting on their hands response.
Governments around the world are investing in the future.
This one has slashed the future.
This one is the Broken Promise budget.
The total value of primary sector science investment falls from $2 billion in NZ Fast Forward under the last government to as little as $1.2 billion now.
It is cutting nearly as much out of science and research in the primary sector as it is investing in infrastructure.
Government spending on science and research, on a like for like basis, falls from around a billion government dollars in the NZ Fast Forward Fund, to $610 million in National’s replacement.
With matching private sector funding, the total investment in primary sector research and development falls by $800 million, or about 0.4 per cent of GDP.
In addition, the government has not replaced a cent of the cancelled research and development tax credit.
This is huge cut in science and research.
It is a disaster for the future of New Zealand’s economy.
It is a disaster for the future of our most important economic sector.
Other developed countries are preparing themselves to come out of this recession stronger.
New Zealand is preparing by switching from science and research to poltergeists and UFOs.
The government promised the primary sector it would spend more on science and research.
That is what David Carter repeatedly promised.
He promised it as recently as this year.
Farmers and our agri businesses will be looking it up.
And they will find not increases, but cuts.
It has broken that promise as surely as if it has broken its promise on personal taxes.
I want to turn to some other features of this disappointing budget.
I want to draw the House’s attention to the table on Page 55 of the fiscal strategy report.
In there the government points to its expected increases in nominal average wages over the next four years.
If you deduct those from the CPI – the cost of living index - there will be no increases in real wages for four years.
No increase in real wages for four years!
This is the curious branch of economics that says the way to make New Zealand better off is to make everyone worse off.
Not since the eighties have we had an economy that didn’t increase real wages for four consecutive years.
It’s hardly conducive to keeping working New Zealanders here.
If they were leaving before, wait until John Key’s policies result in no increase in real wages for four years.
I have to give the National party credit for one thing.
There was a time in the past when National would have said the way to fix that would be to spend up on tax cuts.
At least Bill English and John key have now accepted that tax cuts do not stimulate the economy.
But that is not what they said when they wanted to get elected.
They promised New Zealanders tax cuts.
They now say they can’t afford them. Fair enough. But that’s not what they said when they wanted a vote.
Back then they said their promises took into account the worsening economic climate.
Back then they said
“National has structured its economic package to take account of the changing international climate.”
They weren’t telling the truth when they made the promises that got them elected.
They said: “Our tax cut programme will not require any additional borrowing”.
They weren’t telling the truth when they made the promises that got them elected.
The only way that promise could have been true is if his tax policy wouldn’t require borrowing because it was never going to go ahead anyway - and John Key knew that even before the election
Last year John Key said his tax policy was "appropriate for the current conditions" and would require "no additional borrowing.”
There is no excuse for this.
John Key was here in the eighties and he was here in the nineties when governments got elected and immediately tossed out the promises they got elected on.
I was in here in 1991.
I remember the Bolger government got away with the 1991 budget to begin with.
People gave them the benefit of the doubt that the economy had been wrecked by Roger Douglas and needed hard measures.
But over time it was a disaster.
This one will be too.
Those tax cuts needed to be cancelled.
But they should never have been promised in the first place.
John Key owes New Zealand an apology for getting himself elected on a promise that could never have been kept.
Did he know before the election that the international economic situation was deteriorating, or did he only find out when the Treasury told him?
Neither possible answer reflects well on his fitness to lead a country through a crisis.
I want to turn in the time left to the cuts to the Super Fund.
This is very sneaky politics.
Cutting the Super Fund now reduces the ability of any government in the future to provide for super at anything like existing rates or retirement age.
So what Bill English is doing is pushing out by ten years the hard decisions about the huge tax increases or cuts to super that will be needed to make super affordable.
He has calculated he won’t be finance minister in ten years.
He is right about that!
After this budget he won’t be finance minister in three years.
But he has delivered an enormous burden to future taxpayers.
The affordability of superannuation in the future must decline because we are no longer putting aside something now to pay for some of it in the future.
It was going to pay for around fifteen percent of the future cost.
Now it will pay for less than seven per cent.
That means the age of eligibility for superannuation will be increased to around 67; or else there will be huge tax increases required to pay for it.
That is the doozy the government has announced today.
This is not a budget that prepares New Zealand for the challenges of the future.
There is not a word in here about preparing New Zealand for the effects of climate change.
The Green party will be disappointed that the sum put aside for home insulation has been slashed from a billion dollars to $244 million.
Then we look over at the infrastructure spend, and we can see that the government is shifting $258 million of spending from rail to roads.
So this is what the Greens have got for their cooperation deal with the National party.
They have actually lost money!
They have lost $14 million!
Then what about the Maori party?
Who do they think is going to be hardest hit by this recession?
The National party is not doing anything for new jobs, and the Maori Party is voting for that!
At least Pita Sharples can wave at the unemployed as he drives by in his new car.
National is already causing super damage
03/06/09 12:13 Filed in: News Releases
Increasing calls this week for changes to superannuation entitlements shows that national has already caused damage by cutting contributions to the Superannuation Fund, Wigram MP and Progressive leader Jim Anderton says.
“The cancellation of contributions to the Super Fund means we will be less able to meet the cost of superannuation in the future. This must mean either cuts to entitlement, increasing the age threshold, or substantial tax increases in the future.
“Already commentators are queuing up to say the age of eligibility will have to increase, or the link to the average wage will be dropped - meaning superannuitants will be poorer relative to other New Zealanders. Others are already calling for a return to some kind of surtax that actually penalises people for saving.
“When New Zealanders hear this, they begin to make changes in their lifestyle immediately, because you cannot change your retirement plans at the last minute. Families don’t know how much more they have to put aside to pay for their retirement. And the political consensus they rely on to make long term decisions begins to erode.
“National has a dreadful track record on superannuation because it doesn’t fundamentally believe in all New Zealanders having access to a secure retirement income at a level that enables retired New Zealanders to a reasonable standard of living.
“New Zealanders have already lost some of their security because of National’s decision to back track on meeting some of the future costs of superannuation.
“Increased chatter about future cuts to super is all the proof that’s needed that the damage is already being done,” Jim Anderton said.
“The cancellation of contributions to the Super Fund means we will be less able to meet the cost of superannuation in the future. This must mean either cuts to entitlement, increasing the age threshold, or substantial tax increases in the future.
“Already commentators are queuing up to say the age of eligibility will have to increase, or the link to the average wage will be dropped - meaning superannuitants will be poorer relative to other New Zealanders. Others are already calling for a return to some kind of surtax that actually penalises people for saving.
“When New Zealanders hear this, they begin to make changes in their lifestyle immediately, because you cannot change your retirement plans at the last minute. Families don’t know how much more they have to put aside to pay for their retirement. And the political consensus they rely on to make long term decisions begins to erode.
“National has a dreadful track record on superannuation because it doesn’t fundamentally believe in all New Zealanders having access to a secure retirement income at a level that enables retired New Zealanders to a reasonable standard of living.
“New Zealanders have already lost some of their security because of National’s decision to back track on meeting some of the future costs of superannuation.
“Increased chatter about future cuts to super is all the proof that’s needed that the damage is already being done,” Jim Anderton said.