Instead, almost 10 years later, we\u2019re debating superannuation again. But now it costs almost a billion dollars a fortnight, close to $25 billion this year, and growing at about $1.5b each year.<\/p>\n
Is that affordable? Well sure, but only at the expense of almost everything else.<\/p>\n
National\u2019s recent KiwiSaver proposals have reignited debate about whether it will again campaign on raising the pension age. Nicola Willis hasn\u2019t confirmed the policy but says \u201cwe are going to have to do something\u201d. History suggests they\u2019d pick raising the age over means-testing. Act has previously had a similar preference.<\/p>\n
Labour\u2019s Chris Hipkins, meanwhile, has ruled out superannuation changes \u2013 period \u2013 raising the age of entitlement or means-testing. That makes him ideologically aligned with \u2013 you guessed it \u2013 Peters.<\/p>\n
The longer it takes for everyone to acknowledge that it must change, the harsher it will need to be when it \u2013 inevitably \u2013 changes.<\/p>\n
So, how should it change?<\/p>\n
The Retirement Commission has previously said: \u201cIncome-testing is a fairer way to reduce expenditure on NZ Super compared to raising the age of eligibility.\u201d<\/p>\n
Maintaining universal entitlement but raising the age means those whose bodies have worn out by 65 pay the price. M\u0101ori and Pasifika people, who have shorter life expectancies, will be disproportionately affected. Consigning a physically struggling 65-year-old to a benefit \u2013 which is considerably less than the pension \u2013 to give wealthy New Zealanders money they don\u2019t need is Robin Hood in reverse.<\/p>\n
\u201cPeople really hate hearing this,\u201d economist Shamubeel Eaqub told me recently on The Prosperity Project podcast, \u201cthat New Zealand Super is welfare. It is welfare.\u201d<\/p>\n
I had to laugh when David Seymour sort of accidentally agreed with that at the recent Act Party conference. He railed against the Government paying \u201cnearly $25 billion for people to stay home … if we want people to work, we need to stop paying them not to work\u201d.<\/p>\n
He almost certainly didn\u2019t mean we should be sending 85-year-olds with artificial hips and knees back to work, but the only government payment that\u2019s nearly $25b is superannuation. (Plus, sending pensioners back to work wouldn\u2019t actually change that figure \u2013 because it\u2019s not means tested).<\/p>\n
But wouldn\u2019t means-testing be hard? Rubbish, Eaqub says \u2013 we means-test every other benefit.<\/p>\n
If I were out of work, I would be eligible for the Jobseeker benefit only if my partner earned less than about $1000 a week (gross), because it\u2019s means-tested.<\/p>\n
Once a family of four earn more than $96,000 they\u2019re not eligible for a community services card, because it\u2019s means-tested.<\/p>\n
Working for Families? Means-tested. Disability allowance? Means-tested. Accommodation supplement? Means-tested. Best Start payment? Means-tested.<\/p>\n
That leaves NZ Super in a category of one.<\/p>\n
Not only is means testing fairer, but it appears to have the potential to save more.<\/p>\n
Using some rough numbers, raising the age could save about $3b once fully phased in. But that\u2019s a gross figure \u2013 it ignores what the Government currently gets back in tax, and the fact that some 65- and 66-year-olds may instead have to be on another type of benefit.<\/p>\n
Whereas if we assume that, once fully phased in, means testing might result in 40% of people eventually not being eligible for any level of pension \u2013 which is roughly what it is in Australia \u2013 then we\u2019d save $10b (based on this year\u2019s $25b bill).<\/p>\n
Of course, Australia\u2019s system is imperfect and designing a fair means-testing regime would be fiendishly difficult. But I can\u2019t help but think of what $10b would do for a country that has a $200b infrastructure deficit, and people dying in hospital waiting rooms.<\/p>\n
The attitude to change from retirees has often been that they\u2019ve worked hard all their lives and they deserve it. Absolutely, and they\u2019ll continue to get it \u2013 they have earned that certainty.<\/p>\n
But \u2013 respectfully \u2013 their gigantic voting bloc shouldn\u2019t get the right of veto. Not only will they be unaffected because any meaningful changes would be phased in over decades, but they are also not the ones primarily footing the bill. We have a pay-as-you-go system that is becoming structurally unaffordable. The ratio of retirees to those of working age in the 1960s was about 1:7; it is currently about 1:4, and it\u2019s on track to get to 1:2 by 2065.<\/p>\n
I suspect we\u2019re reaching a tipping point. The public knows this is unsustainable. They can see how tight the Government\u2019s Budget is, how large the debt pile is, how few options are available for funding healthcare and infrastructure and education. They can see it doesn\u2019t make sense to give a benefit to someone who does not need it, at the expense of a public who cannot afford it.<\/p>\n
But they also fear what changes might mean for them \u2013 and fair enough.<\/p>\n
That\u2019s why some rational debate would be so welcome. Because changes would not and could not be brought in overnight. People need 30 years to prepare for retirement, Eaqub suggests.<\/p>\n
We cannot build an economically prosperous society when we\u2019re on track to have only two working people for every retiree on a full pension. We cannot expect today\u2019s young people to stick around if we don\u2019t show them how we\u2019re going to fix that.<\/p>\n
Maybe the answer isn\u2019t means-testing \u2013 but please, politicians, have the political courage to show us what is.<\/p>\n