During Covid, we purchased health, stability and comfort and sent the invoice to children who had no vote, no voice and no choice. In such an emergency, extraordinary spending may sometimes be justified. But the deeper problem was the instinct. New Zealand is increasingly willing to privilege present consumption over future flourishing.
Nowhere is that disorder more entrenched than in New Zealand’s superannuation politics.
The emergency context of Covid demanded painful and expensive decisions. But unlike that crisis, we continue to mine the future for its wealth and opportunities to consume more today, not in the name of saving lives, but in the name of preserving lifestyles.
It is a mathematical reality that New Zealand cannot afford the current superannuation structure.
Treasury says New Zealand Superannuation cost 3.9% of GDP in 2006. It is about 5.1% now. Under current settings, it is projected to rise to around 8% by 2065. The demographics that once made the system workable have changed. In the 1960s, there were about seven working-age New Zealanders for every person over 65. Today, there are four. By 2065, in the middle of my children’s working lives, Treasury projects there will be just two.
These are not ideological talking points. Treasury puts it in unusually plain language: “New Zealand’s current policies are not sustainable.” If current settings are left unchanged, net core Crown debt would rise to around 200% of GDP by 2065.
Universal superannuation will always mean that some individuals contribute more than they receive, while others receive more than they contribute. But redistribution within a society at a given moment is quite different from extracting wealth from one generation for the benefit of another.
I want to be clear: a decent society honours its elderly. It does not speak of them as a burden. Many older New Zealanders paid taxes for decades, raised families, built businesses, served communities and planned their retirement around the rules they were given. They are not the villains in this story.
The fault lies with a political class too timid to tell the truth and too compromised to address the injustice. But we need leadership on this issue. Changing Super settings will be painful for some, but it will only get worse. Ongoing failure to acknowledge the inevitable will eventually lead to crisis.
Preserving current superannuation settings without serious reform elsewhere places the burden on those still working and those not yet born. Addressing this shortfall through tax increases alone would require the average tax rate on labour income to rise from 21% in 2025 to 32% in 2065 (a 50% increase). Alternatively, GST would need to rise to 32%.
In other words, every year we refuse to reform the system, we do not avoid sacrifice. We simply choose who will bear it: future generations, despite the fact those alive today benefited from earlier generations doing the opposite.
This is not only economically bankrupt. It is morally bankrupt.
A mature society expects each generation to leave a country at least as strong as the one it inherited. It does not systematically transfer obligations downward while hoarding entitlements upward. It does not ask the young to finance comforts that the old were unwilling even to reconsider.
And it certainly does not congratulate itself for compassion while quietly looting the future.
What does it say about our society if we care so little for the future and for those who will live in it that we insist they pay for our comfort today? Wealth is not a natural state and there is no reason to assume future generations of New Zealanders will enjoy it if we continue to act irresponsibly.
The Covid response was an emergency. Superannuation is the status quo. But both rest on the same decadent assumption: that the future exists as a resource to be drawn upon by the present.
My children will not remember the lockdown years, but they will pay for them. Should we be surprised if, in time, more of our children decide to move overseas? What sort of superannuation will we afford then?
It is one of the most natural instincts in the world to give our children a better life than we ourselves have known. It is our duty to ensure they can afford a future in this country, even if it requires us to sacrifice. A nation that forgets that duty will, in time, forfeit the peace, prosperity and stability others sacrificed so much to secure.
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