And unless we collectively have this conversation now, the changes to prevent unsustainable public debt will be radically forced upon us and have the potential to cause social disharmony.
The OECD believed our ageing population was only making it harder to balance our books.
After the OECD report, Finance Minister Nicola Willis added her voice to the conversation. She said changes to Super needed to be made, but they did need to be drastic.
This is true, if changes are made gradually and parliamentarians don’t collectively kick the can down the road to chalk up short-term political wins.
“We are going to have to do something. If you’re sensible, you listen to these facts,” Willis told Newstalk ZB’s Mike Hosking Breakfast.
“In the 1960s, there were around seven New Zealanders of working age for every person aged 65 or older. Today, there are four, and by 2065 there will only be two. So that burden on our taxpayers is increasing significantly.”
Willis said that between last year and the end of the fiscal period, the cost of NZ Super would increase by about $6 billion a year. The cost was projected to climb from just over 16% currently to more than 20% of every tax dollar.
Prime Minister Christopher Luxon has said the National Party will campaign on lifting the age of eligibility at this year’s election.
“We will go to the election with another election policy around superannuation and lifting the retirement age for sure,” Luxon said, but declined to provide further details.
New Zealand is already in a significant infrastructure deficit. Without amendments, the money we are using today and tomorrow to maintain the current Superannuation eligibility will be money we can’t use for improving our education and health systems.
Labour leader Chris Hipkins has said he is open to discussing whether New Zealand Super should be means-tested.
“I am open to a conversation about that, but I think it has to be done in a constructive, bipartisan way.”
While we may be late to the conversation – the qualifying age for the Australian pension is 67 for anyone born from 1957 onwards – we are at least making a start.
Most reasonable people agree the eligibility age needs to rise but, judging by the many Kiwis calling into Newstalk ZB yesterday to discuss the topic, no one wants to be the age group that misses out.
This will be one of the key problems politicians will need to grapple with: How to convince a voting public that they should be the ones to delay or even forgo what they feel entitled to.