Andrew Dickens: Government should pause contributions to NZ Super Fund

Author
Andrew Dickens,
Publish Date
Tue, 26 May 2020, 4:24PM
(Photo / File)

Andrew Dickens: Government should pause contributions to NZ Super Fund

Author
Andrew Dickens,
Publish Date
Tue, 26 May 2020, 4:24PM

COMMENT:

Never waste a good crisis.

You’re probably sick of hearing that little truism which has been bandied about willy nilly during this Covid Crisis.

But it’s a truism for a reason.  When everything falls down you need to look at what’s necessary and what’s not and what you’ve taken for granted and what could be spruced up.

One of those things is National Super.

You knew it was back when it was one of the first policies that new National leader Todd Muller mentioned in his first few days.

In an opening spell that has frustrated some by its lack of specifics, particularly Jack Tame last night of Q&A, Muller has reiterated some existing National Party policies. Firstly National’s plan for small business which involves a GST refund and tax deductions on investments. He’s committed to re-opening oil and gas exploration and reviewing immigration.

But the most specific policy he has signed up to is to slowly and incrementally increase the national Super eligibility age to 67. Remember that John Key resolutely refused to raise the Super age fearing a voter backlash.

Bill English did decide to slowly raise it and copped some stick. Todd Muller has decided that the policy is a keeper.

But a now a number of economists and public policy specialists are raising their voices saying that our current scheme is unaffordable. ANZ economist Sharon Zollner has said that a number of our sacred cows will be reviewed and Super is one of them.

As they say NZ Super is paid for from general taxation and is this still possible when we go through the greatest economic shock in generations.

All sorts of think tanks have been popping up with suggestions.  The New Zealand Initiative says Super should be linked to health expectancy which would raise the age of entitlement nearer 70.  Another suggestion is that increased should be linked to inflation and not wages which in this low inflation environment would leave Super barely changed for years.

These are all big things and if a government is serious about navigating our new debt endebted world then they should be seriously looking at them.

But there’s on aspect of retirement savings that needs to change immediately.  It makes no sense when we are reliant on borrowing for the government to take those borrowed funds and continue contributions to the NZ Super Fund.  We paused them during the GFC and we should pause them now.