Read Darel Hall‘s commentary every Monday.
Darel has a background in tertiary education policy and politics and was the Deputy Director of the Labour Party Research Unit during the first term of the last Labour-led government. His goal is to provide a thoughtful perspective that causes readers to reflect on their experience, understanding and beliefs.
Don Brash wants to increase the Superannuation entitlement age to 67. Last week he was emphatic that “Every objective observer can see that the age of entitlement has to rise gradually over the next 10 years or so”.
Less than seven years ago, in a speech entitled ‘Superannuation is Secure’, Don Brash, when he led National, was equally emphatic that something didn’t need to be done for 25 years and at one point 30 – 40 years.
He was equally emphatic that the political squabble over the superannuation issue was at an end. National, he said, was now committed to Superannuation from age 65, at 65% of the average wage for a married couple, with no income test or asset test, and was committed to the Cullen Fund to ensure its provision.
There are some things said as leader of a major party with a realistic chance of being responsible for responsible government, and then . . .
In his speech last week Don Brash accused both John Key and Phil Goff with being dishonest with New Zealanders about Superannuation. Really that is just the political equivalent of Aussie First Five Quade Cooper’s physical bravery whenever Richie McCaw is trapped on the ground. Brash knows he doesn’t have to work to get popular support to govern (ie democracy) so he no longer bothers to pretends.
Or does Brash have a point and he just lacks the legitimacy to be playing the messenger?
Grey Power’s position is: "Superannuation to be a state funded scheme payable at the age of 65 years that allows the retired person an adequate income to live in reasonable comfort and dignity and be able to participate fully in the community. That superannuation be accepted as an entitlement and non-means tested. This income should include a special provision to provide for the needs of the person living alone.”
But what is magical about 65? Grey Power also “recognises that the development of medicines and other health remedies has attributed to an increased life expectancy of older people within New Zealand and now accepts the age of entitlement of New Zealand Superannuation be permanently fixed at 65 years of age”. Presumably this follows the increase National made in the 1990s from 60 to 65.
If the state funded superannuation is about securing the last portion of a person’s life shouldn’t the age increase along with life expectancy as it rises each decade?
This argument could lead to complicated variable starting points for Superannuation as there are very pronounced life expectancy differences between women and men, and between Pakeha and Maori.
However, the rather moderate proposal of raising general entitlement from 65 to 67 advanced by the Retirement Commission is pretty much what Don Brash is talking about. (Talking about legitimate messengers, Sunray realises that at 44 he is in a poor position to describe this change as moderate. More about messengers later).
The Commission makes the point that spending will rise from about 4.5% of GDP now to over 7% by 2040. But that with a gradual increase to 67 starting in the next 10 years and arriving at 67 by 2033 (ie delaying Sunray’s eligibility by a year) spending will remain at a more sustainable rate of about 5.5%.
Demographics will drive policy no matter which party is in power. A gradual raising of the Superannuation will happen, it’s really a question of who does it, when and the details of how.
The people best to lead the debate are not the comfortably-off politicians and public servants. The best people are those that have something to lose, the people that have to make a sacrifice. It is probably the 50 year olds who need to do this, perhaps organised by Grey Power – ‘Salt and Pepper Power’, perhaps?