Budget 2012 would not have dealt with rising superannuation costs or the age of eligibility, regardless of National's stance on keeping the age at 65, Prime Minister John Key says.
That's because Treasury's projections out to 2020 showed the current settings were affordable, he said.
However, National accepted there were implications of an ageing population which may need to be addressed sometime down the track.
Speaking to media at his post-Cabinet press conference on Monday afternoon, Key said that, faced with those implications, the government's focus was on fostering economic growth and getting the government's balance sheet into a position where it could deal with rising costs faced in the future.
'We can see the implications too'
“Everyone can see that there’s an ageing population in New Zealand – we acknowledge that. It’s also true that it has an implication in a number of areas like healthcare," Key said.
“But in reality, despite the issues that we see in Greece and Europe in general, changing something in 2020 wouldn’t actually make any difference [now] when it comes to that issue," he said in relation to the Retirement Commissioner's recommendation that the eligibility age for Super should rise from 65 to 67 between 2020 and 2032, a recommendation the Labour Party made into a policy for Election 2011.
The government had modelled the cost of Super until the end of its forecast period of 2020, and was comfortable in terms of the numbers. Budget 2012 documents show the cost of Super is set to rise from NZ$9.5 billion this year to NZ$12.6 billion in 2016.
“Treasury’s done that work for us, and the significant changes are not directly related to Superannuation. There are a number of other factors. Our focus is really on economic growth and lifting the economy," Key said.
While planning for the costs past 2020 may need to be done, “it may be for another day – but not for today.”
It was healthy for the country to have the debate and the ministry of health was looking at the general costs of an ageing population.
“Superannuation is just simply one of the costs of an ageing population," Key said.
“But they go all the way back to the fundamental point, which is, if New Zealand is going to incur greater costs because of an ageing population, then that’s all the more reason why we need two things – stronger economic growth, and secondly, a balance sheet that can support any additional costs we might face, which is why we need to get back to surplus by 2014/15," he said
Meanwhile, Cabinet Ministers had “kicked the tyres” on the issue of the age of eligibility, but no serious consideration had been given to changing National's stance on it.
Asked about other countries currently raising their Super ages, and why New Zealand was not following suit, Key replied many of those countries did not provide universal superannuation.
“In other words, New Zealand effectively has a commitment with our citizens to pay them universal superannuation at 65. That is different in those countries. There’s more flexibility for their workers because they tend to have private provision," he said.
“I think we all accept that people are living longer, and some people are certainly in the workforce longer, and their capacity to work longer, or maybe take superannuation at a higher age, would be greeted with ambivalence by quite a lot of people.
“But there’s also a lot of people who are in manual jobs where that’s just not that practical. At 65, they’re still going to be in a position where, frankly, it’s very difficult for them to continue to work. We already have a lot of people who are 63 or 64 who we transition into Superannuation, in a form, early on. So it’s, in my view, just not straightforward," Key said.
The focus of attention of this government had been on economic growth.
"I can’t rule out what future governments might do, but...even if we hadn’t made that pledge, it is not something we would have been changing in Budget 2012,” Key said.
14 Comments
I was just winding you up Ivan. Glad to have helped spur some debate though. Your comments about Labour supporters are probably right. But what's the solution? Keep paying out as much as required under the current super scheme year after year and cutting teacher numbers? Means testing?
So he won't change something that has gone from costing 6.8 Billion in 2006, 9.5 Billion this year, and will cost 12.3 billion in 2016.
When most other major Western countries have either already done it or are thinking about it.
But they will go wasting time robbing paper boys for a few thousand.
These guys will keep breaking their previous records of borrowing at record levels, and kicking the can further down the road, for another government to clean up the mess.
even if he changes it right now, as treasury outlined, policy changes won't start until 2020, and won't be in full swing until 2035.
so why would he risk losing votes in 2012, with a budget not reaching beyond 14/15?
the next, or even the one after the next, prime minister could announce the changes in 2017/2018 and the changes could start from 2020 nonetheless.
I was interested to Note that the new French Prime Minister ousted his opposition PM with the promise to REDUCE the French Retirement Age to 61 years.
This has just been put into effect.
When the Tax is taken off you for this purpose, then you expect a payout.
The Maori people mostly do not get their fair share of National Superannuation, because they unfortunately die early, and those that want the Maori Vote will retain 65 years, as the retiring age.
A tweek to it could be for a Partner not to receive National Superannuation until they are also 65years. One policy the same for both Male and Female.
Can't believe Labour is dumping on its own voters again.- just thick I guess.
Many people in jobs that don't involve teaching or driving a desk are not able to work on past 65. Most physical jobs have wrecked their employees bodies long before 60 , but we hear these captains of industry saying ' face it - 70 is the new 60 ' - obviously their dad wasn't a bricklayer.
But what about the cost ? Well lets get all these ex bricklayers working at Macs or similar 'entry to work' type jobs. This deprives school leavers of jobs, puts them on the dole,( and so negating any super savings ) but worse still having been unemployed for a year or two it almost makes certain that they will be beneficiaries for life !
Unless our economy( the cake ) is going to take a massive dive, the question is just about how it is distributed amongst our constituent population.
But , if you still believe super is unaffordable the only thing to do is to means test it. The hated surcharge on ( employment ) income being the fairest way to abate super for those who don't need it and encourage people to move on from their jobs to give someone younger a shot at the life we have had.
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