Tuesday, June 12, 2012

The 'Key' to superannuation

Superannuation - What is it about National Governments and their inability to make decisions in the interests of the country when it comes to the basic issue of superannuation?

Prime Minister John Key has painted himself into a corner over his claim that the age of eligibility for superannuation, 65 years, will not change on his watch.

It is patently obvious that superior lifestyle has resulted in people living longer. In many instances that means people are capable of working longer. Of course, there are exceptions and there are people to whom working beyond 60 years is an issue.

But, generally, New Zealanders can expect that the majority of the population will be capable of working longer in the future – in many cases they will have to because the drain of young people offshore looking for work, a drain that the said Mr Key was going to stop when he was campaigning against Helen Clark and Labour in 2008, has reached epidemic proportions

It remains a frustration for this observer that in the leadership debates of that campaign the incumbent Clark did not challenge Key when he was blathering on about stopping the brain drain. All she had to do to end the argument was ask where Key had earned the money that allowed him to have the lifestyle he enjoyed? It certainly wasn't from years spent working his way up from the back benches in New Zealand.

But then again the fight was no longer in Clark – she had had enough it would seem.

However, it seems that in sticking to his claim over the eligibility age that Key is determined to avoid the back flip that George Bush the first suffered over his pre-election campaigning on 'No More Taxes'. A promise that was very quickly undone once he replaced Ronald Reagan in the White House.

Back in New Zealand the age of eligibility has become an issue for which the public may well be prepared to punish the government, which is plugging austerity in all other areas of the economy.

Let's not forget that it was Robert Muldoon who showed a flagrant disregard for the future by throwing out the compulsory superannuation scheme set up by Roger Douglas in the Kirk-Rowling Government of 1972-75.

Dancing Cossacks flashed across television screens, catching the eye of those nearing their retirement sufficiently to put Muldoon in power with his promise that he would close the scheme down and install a scheme that would mean once reaching the age of 60 people would be able to receive National's superannuation, even if they were still working! Let's not forget that – they were still able to receive the payout if they were still working.

It is little wonder that generation were known as 'The Greedies'.

In making that choice Muldoon sent New Zealand into permanent debt. There are two thoughts here: how much of the country's financial frustrations of the moment are a direct result of that decision and, more importantly, how much better off might New Zealand be had he not made that choice?

Muldoon trumpeted that the New Zealand Superannuation Scheme was going to result in the nationalisation of New Zealand's industries. It was going to be communism by stealth. The Greedies were sucked in lock, stock and Think Big.

In fact, and to their shame the Labour Government of the day did not make this point sufficiently, it was enshrined in law that the NZ Super Scheme would not be allowed to invest any more than 15 percent in any New Zealand company. 15 percent!!

That figure is important because Key and his Cabinet are asking that the New Zealand Superannuation Fund set up by Labour's Michael Cullen should invest up to 40 percent in New Zealand companies.

What would Muldoon make of that? If what he canned in 1975 was communism by stealth what does 40 percent investment represent?

Just as Muldoon's failure hamstrung a generation, so Key's foot-dragging is likely to do for the generations who follow those who move into retirement over the next 20-odd years.

It is only commonsense that a phased rise in the eligibility age be introduced as soon as possible.

So poll-driven has the Government become that there is a chance that Key will see the error of his ways and make a decision forthwith.

His highly unpopular austerity measures continue in other aspects so it defies belief that the one popular measure he could implement, and with exceptions for those whose work might qualify for a maintaining of retirement at 65, could elude him.

Failure to act leaves him facing the same sort of legacy his predecessor Muldoon enjoys for his greed for power at any cost.