So if you’ve been hiding under a hole until recently, Bill English let slip in an interview recently that he wasn’t going to renew John Key’s pledge on not touching superannuation, then, like Labour, went and made it an election issue by announcing he would, in 2040, raise the retirement age by two years. I had meant to get to this issue sooner but have been sidetracked with other priorities.
There are so many sides to this. The first is, Bill English has literally set the cut off for when people should retire with the generation that has borne the brunt of increasing inter-generational warfare waged on behalf of (although not necessarily with the consent of all) Baby Boomers. Gen X, the generation that paid the first student loans, and did it with interest, is being told they’re the ones who will be asked to cut costs if National can govern without a coalition.
First, let’s be real here: while superannuation is less of the national budget in New Zealand than it is overseas, (per capita we spend about half as much as say, European countries do, and get a better system out of it) there’s still a very real affordability problem if we want to maintain government spending in other areas once the Boomers hit super age en masse. (some already qualify, but the real big hit is yet to come) Nobody, even the two parties who were consistent in wanting to maintain super at 65 for the general population, (That’s the Greens and New Zealand First, if you’re curious) is arguing with that fact.
If we’re going to maintain super, we need to look at the revenue side of the equation. Remember how I proposed a solution in search of a problem back when I said we should tax the wealthy? A comprehensive capital gains tax would more than fund Super, in fact, it would go a long way to funding a UBI1. Julie Anne Genter literally has very similar opinions on this issue.
If we take the revenue steps we need to anyway to ensure a more equal society, we can easily afford super, and we can do so off wealth taxes that will effectively act as a means test without all the administrative costs, as wealthy boomers who don’t need Super might well end up paying more in taxes than they receive anyway, but we still receive the benefits of universality in terms of ease of access, reduction to poverty, and incentive to continue working for those who genuinely wish to and are able to.
There is absolutely no need to start a generational war like Bill English has in order to solve that problem when the gap is clearly on the revenue side. Labour’s answer, squirreling away surplus money, is a good thing to do in principle, but there’s no indication it will make a serious dent in the cost. National’s argument that Gen X will still get Super for a longer percentage of their life than Baby Boomers currently do might be a fair one, if it were taken completely outside the generational context it deserved to be placed in. Gen X, and to a larger extent, Millenials and the upcoming Gen Z, are being asked to bear increasing costs on basically everything, coupled with decreasing opportunities and being left political problems that have been dumped in the “too hard” basket for decades, like climate change. This super announcement is one too many kicks in the ribs, and National better hope it doesn’t mobilise younger voters who’ve stayed home, because they are big Green supporters, and a 20% boost to turnout of the youth vote would literally change the electoral maths on this issue.
Politics aside, if we can square those financial challenges away with a bit of a surplus, we should also be considering the points made by the Māori and Mana parties about equity of Super, and their support for some level of flexi super, and/or some reduction to the age of eligibility for Māori and/or people in taxing manual employment. These are absolutely fair ideas that deserve consideration. Let manual workers who struggle to make it to 65 have a bit of super. If there’s any argument to raise the age, it’s so we can afford to let manual labourers and Māori have an equitable piece of the super pie.
Overall, I hope voters will stand together in the coming election and realise that there isn’t a need for this divisive type of politics. We can keep super at its current settings without sacrificing our other spending priorities if we tax the wealthy more fairly, but that will never happen under a National government.
1 That link is my short-term model for UBI funding. It’s pretty pessimistic, it operates off a simplistic model, and basically assumes a lot of things that are likely not going to be the case in the long term from funding a UBI, or may never even be the case at all, but I wanted to show you can start funding a UBI from taxing the wealthy in a way that’s fair and provides a reasonably livable income, better than the $12.5k per annum (which is unlivable for a lot of areas even with very cheap cost assumptions) that Labour was floating around when it considered a UBI in its Future of Work project. The link is set up to do roughly the minimum necessary to ensure short-term funding for a $20k per annum UBI, which would represent a slight cut in replacing Super, but the Government could consider running a short-term deficit in anticipation of long-term savings to run a $25k UBI, or it could look for additional revenue. (although the net cost about doubles to add that extra $5k benefit in)