By Alex Tarrant
The Winston Peters Super Saga shows just how broken New Zealand’s benefit system is, TOP Party founder and economist Gareth Morgan says.
Morgan ripped into New Zealand’s universal super payments on Monday after it was revealed Peters had been receiving too much superannuation the last few years being on a single rather than de-facto rate.
Meanwhile, in other comments he said:
- TOP’s tax policy is “head and shoulders” above others when it comes to policies Morgan wants to see enacted next term if he enters Parliament
- That Morgan’s ‘Big Kahuna’ idea is the ultimate policy driver for TOP – while it doesn’t think it could implement all the policy required in a first term in Parliament to reach this goal, the party is eyeing a second term to finish the job if it makes progress after 23 September.
- TOP’s polling is showing the party at 3-4%. “We’ll get five,” Morgan said.
Super broken
The Super saga broke over the weekend with various media outlets revealing Peters had been receiving a higher rate for five years than he should have been. Peters has argued he hadn’t noticed he was being paid the wrong rate. Morgan gave him credit for paying the money back (although, “I struggle with that guy. I struggle with him on a number of fronts.”).
But, he couldn’t help launching into a tirade about the system itself. “Doesn’t the fact that he didn’t even notice [what] he was getting paid, just tell us how broken our benefit system is? You’ve got benefits here going to people who don’t need them,” Morgan said.
Morgan and his wife are set to start receiving Super next year. “It’s just under 40 grand a year [combined]. Into our household. I don’t need a cent of it. I don’t need any of it,” he said.
Then he really got going. “What the hell are you doing, when we have the amount of poverty and social dysfunction in New Zealand. It’s just nuts. I’m just going to buy a motorcycle with it, and all my mates just use it to go to Fiji. It just gives you an idea of how askew this is – this system.
“Now I don’t know how many bottles of whisky or packs of cigarettes Winston’s bought with his overpayment, and it’s not our business. But I do know, with an annual income of close to $200,000, he doesn’t need the sort of $20,000 extra from the workers of today to keep him in the manner that he’s obviously become accustomed to. That’s my whole point,” Morgan said.
“That’s why TOP is planning to means-test the second $10,000 of New Zealand Super and pass those savings – $3 billion – onto young families with children under three [years’ old] through a $200 a week UBI.”
TOP will also back reversing National’s tax threshold moves – something Labour is also calling for if it leads a government after the election. “You know, that’s the one that Steven Joyce announced the other day – that he and I were going to get another big fat tax cut – well we would cancel that and use that 2.5 billion to give UBI to young New Zealanders 18-23 [years’ old],” Morgan said.
Peters’ situation “is a personification of the intergenerational unfairness that none of the old establishment parties are prepared to address. It’s just simply wrong,” he said. “The system is stuffed, that it can actually give somebody on that sort of wage so much money, and he doesn’t even notice it. This is how we’ve got it wrong.”
I asked Morgan whether that criticism could then also be thrown at those calling for a universal basic income?
“No, because the thing with super is the extent of it. It’s twice the size of where we’ve set a UBI. You can’t have a UBI anywhere near the minimum wage, otherwise there’s a bit of a moral hazard there,” he replied.
“It’s just that New Zealand Super’s just obscene – just the size of it. And so many of us don’t need it. We actually don’t need any of it. So, all we’re saying is, how about we halve it for you [who don’t need it] – so I’ll have to buy a trail bike each year instead of a road bike.”
New deputy leader, tax policy focus
TOP had called a press conference in Wellington Monday to announce Teresa Moore had been appointed co-deputy leader alongside Geoff Simmons. A previous Green Party candidate, Moore is set to effectively lead TOP’s Parliamentary caucus in ‘day-to-day’ political work if the party hits the 5% threshold on 23 September, while Morgan and Simmons focus on the policy side.
If it gets into Parliament TOP will sit on the cross-benches while attempting to get as many of its policies picked up by whichever party leads government after 23 September. This will likely see it back the government on everyday confidence and supply, although Budget backing would hopefully be given in return for some TOP policies getting through.
“If you’re giving confidence and supply to the incumbent government, you tend to support them on their legislation. I mean, they are the government after all,” Morgan said.
“Unless…I’m pretty hot on this direct democracy thing – this deliberative democracy, I call it – so if we get a piece of legislation coming down the tubes from the incumbent government that we go, ‘ooh that’s a bit dickie’, then we would go back to our membership and we’d have informed discussion about it. Just as we did, actually, with the cannabis policy that we finally came out with. And we’d form a view on it.
“But just run-of-the-mill stuff, we’d…not stand in their way – Labour or National,” he said.” The deal would be that we want as much of our TOP…policies through as possible. But that’ll be negotiated at the start of the term.”
Asked whether TOP would enter Parliament with a policy priority list, Morgan said TOP’s flagship tax policy was “head and shoulders above everything else.”
“In my view, without doing that, it’s just same-old, same-old too much,” he said. “That by far is the revolution, and the way we pay our tax and we provide our social security. That would be the one that I fight hardest over.”
Morgan said his 'Big Kahuna' idea was the overall driving force behind TOP's policy platform. He said he's not envisaging getting everything cleared in one term to bring about the change, and that TOP having a second term would be required to move on the majority of incomes by imposing a flat income tax rate. On whether he would stick around for that, Morgan said: “I’m not going to be there forever.”
He did acknowledge TOP will likely be a small Parliamentary party, at least this term, with somewhere between five and ten percent of the vote. “And we’re dealing with whoever will be a lot bigger. So it has to come down to negotiation,” he said. He said a UMR poll had showed the party on about 4% support, although others were showing 3-4%, Morgan said.
Most public polls have TOP on 2-2.5%. “We’ll get five,” he said.
77 Comments
He does make some good points. We spend 50% of our welfare budget on a universal basic income to oldies regardless of need for it, and - with the undermining of opportunities for young Kiwis - it's another example of the imbalance happening between generations.
Doesn't make it an easy area to adjust, though. As soon as you deny it to some they'll be incentivised to start voting to remove it or reduce it for others (see the arguments often made "Why should I give my tax money to fund these other people?"). Nor it is necessarily desirable to means test it - but so long as we're not equitably taxing wealth gains we're foisting an awfully big load on taxpaying workers to fund things as they are.
It isn't a benefit, it is an entitlement. The problem is that it gets administrated by Winz, so people think it is a benefit. However it is really no different from people paying into their own super scheme, but with this one, everyone pays into it and people pay for it with paying higher taxes. It is perfectly fair, and not discriminatory .
People who don't need it can choose to either donate it, not accept it, rather than buy things like motorbikes. But people who don't need it will be in the minority.
Maybe they need a dedicated Super government department, so it isn't administrated by winz, and that can then ringfence it as it's own thing in the books.
Just to be clear though, it's not pre-funded. You aren't paying into it with taxes. (Except the Cullen fund, at the time, and your personal Kiwisaver.) It is a benefit or entitlement paid for out of today's taxes. There were times NZ looked at pre-funding it, e.g. when Muldoon scuppered the idea.
Effectively, it's a UBI given to a group in society and funded via taxes. In that way it's like any other benefit we have, except it's given regardless of need.
Rick - you are totally wrong on this one. The oldies you love to refer to are the ones who paid much higher taxes e.g. 63% to fund it (the Cullen Fund being started to ring fence it for the future). There are so many more issues here. How many workers are mortgaged to the hilt at miniscule interest rates but getting working for families, accommodation allowance, 20 hours free childcare,community card etc . My girls in their 30's did not get free Uni education. The oldies you talk about received nothing in comparison to what the Govt is paying in subsidies to people today. Add in the Policy that allows migrants to get paid Super after 10 years in the country. Add in the number of migrants on benefits. We need to stop the them and us conversations and find a solution. Not Gareth's. Just refuse it Gareth. I would suggest that National repay the $2B they have failed to pay into the scheme.
I'm pretty sure I'm not wrong on NZ pension being post-funded (notwithstanding Cullen starting a fund to try to address that). Happy to be corrected with a source, though. Also, wasn't 63% as a tax rate quite a while back?
We have twice as many receiving the pension benefit than the other benefits, but agree the things you listed are definitely major issues, including the exploitation of the pension and other benefits via recent arrivals.
I also agree that WFF should go the same way as the old universal Family Benefit. If we address housing affordability the need for WFF, Accommodation Supplement and other ambulances at the bottom of the cliff significantly reduces. I'd be in favour of resurrecting earlier governments' policies that fostered housing affordability to reduce the need for these ambulances.
in 1975 labour tried to set up a prefunded super (like kiwisver) but national changed it to a fund as you go model which at the time was fine as the numbers were low. again short sighted political thinking
so you are correct. you are paying for people on super today not for your super in the future.
if you are in kiwisaver you are saving for your future retirement and if young enough could be all you get as we move to a prefunded model
It is irreverent if it is prefunded or not, as it came down to the government choosing not to save and invest it, but spend it. Cullen however did create the Cullen fund to help prefund it when we reach a bubble of people reaching entitlement age, but the current government decided to stop paying into it, and rather pay it out of current income. It comes down to whether the government that is in thinks that the money is better to be saved and invested, or spent. But if this government had continued to make payments, I suspect the fund would be huge today due to how much the sharemarket has gone up. Have their been any calculations released?\
I suspect kiwisaver will eventually replace the super scheme once they make it compulsory etc.
While I agree he makes a good point, I am a fan of universality. You pretty much have to be a multi-millionaire with cash not to need Super (now listen to people saying all those oldies asset rich but cash poor have to make themselves homeless to survive). I think it is a poor example when he argues that he'll have to buy two trail bikes a year instead of one, he's worth more than $50 Mil for gods sake! So he doesn't need super - that is not representative of the rest of us. As to Peters, his MP Super is better than any of gets too, perhaps it is not that he received more than he was entitled to but the size of his total package, compared to ordinary kiwis, that should come under scrutiny?
" he's worth more than $50 Mil for god's sake! So he doesn't need super " That's just TOP's point! So lets' kick it off with a Mean Test at $50 million. Then drop it over time to, say, $5 million ( or whatever). Universal Super was 'in' before Kwiwsaver came along. The idea being that it would eventually replace Universality ( KiwiSaver should be just that - Universal?). "A journey of a thousand miles starts with the first step" etc....
I don't know how this system works but why not make it that you have to apply for it rather than get it paid automatically? That way Gareth won't receive it. I think Winston did apply for it, because he stated in an interview his partner was sitting beside him when he did. That was why he was surprised he was overpaid. Perhaps he should be asked why he applied for it when he didn't need it?
What, so only greedy old people should be able to apply and get the money. Winnie applied because the law said he can. You change the law if it is stupid, shaming people into not taking their entitlement is pretty pointless.
For example, if you introduce a universal benefit for everybody e.g. $400 a week on offer to all but only apply if you "really really" need it (no questions asked). See how that works out.
Murray, it is an "opt in" benefit - meaning you need to apply (i.e., "opt in") to receive it.
If you don't apply the state does not automatically start crediting your bank account at age 65.
I've often thought they should have a publicly available for search "opt out" register - so that those people who do not choose to opt in are recognised publicly for their philanthropy. Perhaps all those who choose to "opt out" could decide to have their payments direct credited to a charity of their choice and that too could be listed alongside their name.
This article is just political posturing. Pitting one Generation of the population against another.
Come up with common sense policy on Superannuation. What you put into in is what you get out of it. NOTHING IN NOTHING OUT. But wait a minute it would not matter what system you brought in the politicians could not keep their hands off it. This Guy included.
There is already generational conflict. Why do I and my young family need to struggle to pay taxes to support my in-laws who are multi millionaires. It grates me every time I go to their mansion and I hear the old "I hadn't checked my super account for several years (a bit like Winnie), but I've amassed around $80k so we plan on a European tour and cruise. Luxury off course. Hehehe."
Scum.
I agree, there definitely is a generational conflict in NZ. The younger Gen Xers and Gen Yers renting for life in damp, mouldy accommodation owned by Boomers and paying tax to support Super for Boomers. There sure as hell won't be anything left over for anyone else once they're gone.
Superannuation is not a benefit, it is an entitlement.
And means testing it is simply stupid.
Why should I make any provision for my old age if I am going to be means tested?
Why should I subsidise anyone who has not bothered to make any provision?
It would be better for me to piss away all my Kiwisaver funds on imported luxuries and then let everyone else really pay me benefits.
If you want to live hand to mouth in your dotage to pull $400 bucks a week in super then knock yourself out. Blow your money on piss like a grasshopper and let us ants take the cream.
This same BS argument could be used to support universal dole e.g. why should I work and pay taxes when I can just be a bum and get the dole.
The $400 bucks a week is just the start.
I'll also claim Accommodation Allowance, various health and transport benefits, and as many special allowances I can get.
And I'll thank taxpayers for their generosity while I do so.
Are you sure you want me to splurge my Kiwisaver funds the moment I'm 65?
It is also extremely difficult to do and would require an army of accountants, lawyers and investigators.
How to track the overseas bank accounts, property, and even nat super in countries of which we have no info exchange agreements?
How about trusts when the person is not a trustee and thus not names on any proeprty records? How about those with a company who do not pay themslves a salary? How about those with $5mill farm but make losses...or someone with a $2 mill dollar bach and no income from it?
Not to mention bitcoin..
The current welfare sytem is based on honesty. Is that really good enough these days?
"Superannuation is not a benefit, it is an entitlement"
Unfortunately the future has being plundered to uphold these "entitlements". You cant entitle anyone to anything when the resources aren't there. Your provision is now just pixelated thin air.
“Financialization is nothing more than money with its value removed.”
An entitlement yes but now we live longer it means recent pensioners like myself are getting more out compared to what we put in than those who went before us and of course those who come after us will bankrupt the system.
It is rather obvious that what we put in on average ought to be what we take out on average therefore retirement age should be recalculated regularly such as to promise say 12 years superannuation on average. So if life expectancy is 81 then superannuation should start at 69.
Universal benefit is less hassle for both children and pensioners - don't worry about the wealthy kids and oldies because the taxman will claw some back.
The human lifespan isn't really increasing. It is just that more people are potentially living longer, but only on average. Also just because you live longer doesn't mean that people are capable of working for longer. Many people should give up work well before 70 as they are worn out or past it. Some are past it before 60-65 TBH.
As our retirement commissioner said in the building trade 50 is just about as far as your body can go. We do need to be looking at a solution for manual workers and as an ex-programmer the old brain slows down too. Some means of tapering down with government approval ~ maybe some jobs disproportionally reserved for old-timers (teachers aide for example).
Life expectancy has been changing for the last 100 years. I take tablets for blood pressure - 30 years ago I probably would have had a stroke before 65. When the pension was invented the age was set to average life expectancy. Actuaries are the experts.
My understanding is that the universality of the benefit is partly why NZers don't retire, often working into their 70s. They're motivated to keep earning a bit extra for the nice "little things".
In the UK etc, with means-testing, people shrug & say "What's the point of keeping working, it'll only be means-tested away." So they retire, and then their savings run out they get the full benefit.
Since we have an ageing population, I would have thought it made economic & social sense to motivate people to keep working.
... and I would have thought an economist would understand that...
Far more sensible to raise the age of eligibility to (say) 68.
You can call super any name you like. You can call it an entitlement if you wish. Regardless of the label is still paid for by todays taxpayers and is not prepaid. Your "entitlement" may well disappear if future taxpayers revolt.
Your Kiwisaver predicament is perhaps a slow version of Prisoner's dilemma.
My workplace and many i visit are full of workers getting national super and a darn good salary. They are on the pigs back, no worries about pay rises, work targets....they need not care.
Then we have national super available at the married rate long as one is over 65 (income tested though). The other partner can be as yoing as 16 years and nothing expected of that partner, not expected to work - nothing at all. Money for doing nothing and its part of the policy. Nuts!!
If you are old and depend on the help of a partner who is under 65 then that partners pension is necessary. As you say it is heavily income tested - from memory it was about $5000 per year and then you lose dollar for dollar. The partner has to cohabit. I think you worry too much about 16 year olds costing the taxpayer - if any exist I suspect they effectively kill off the pensioner before his time and thus saving government funds.
Oh they exist alright... old goats and their recently imported bride child is a thing.
A blip in reality, but a silly policy as it means just because you are 'married' you are not subject to a work test. You are not treated as unemployed and required to furfill the obligations that those on enemployment have to.
t's a free ticket to a benefit as of right (like super) just because you are married - age regardless.
If anything happens to my wife I will consider what you say . A new wife receiving super is far cheaper than needing to employ a full time nurse / care-giver. Obviously not 16 but a nice plump 45 would be fine preferably unable to speak English with no extended family and a friendly smile.
On the other hand they could just simplify and get rid of the partnership status relating to superannuation. At present it is an encouragement for divorce.
I have sympathy with the idea of more funding for kids and correspondingly less for pensioners.
But I really want to praise MSD. Not the policies they are decided by the government but the ordinary support staff who have the duty of carrying them out. They really go out of their way to be helpful; they are considerate to the fact that many of their clients are getting on a bit both physically and mentally. Without wanting to explain my personal details I want readers to know that earlier this month I wrote and thanked MSD for their help and passed a copy to my MP telling him to ensure the appropriate department head knew his staff were appreciated for being both competent and human. The first time I've ever written complementing a bureaucracy.
Perhaps Gareth should pause to consider what some of the side effects of targeted superannuation would be.
- "I am not saving for my retirement because if I do the Government will give me nothing."
- "what is the minimum that I can save and still get super?"
- "I have a good accountant, I shall transfer my wealth into a trust or my kids name and still get the pension. Pity about all the average honest folk who haven't got the resources to do this"
- and so on
I think the third is probably the most likely. I can't see people not bothering to save at all because the pension will give them a wonderful lifestyle in retirement. But there are certainly cases of folk of low character disguising their wealth in trusts in order to fleece the taxpayer.
"I am not saving for my retirement because if I do the Government (other taxpayers) will give me nothing."
That's why KiwiSaver should be compulsory. It replaces 'The Government' in retirement, and the incentive is "the more I put into KiwiSaver, the better off I'll be ( if I have no other means of support)"
Kiwisaver is a good idea but basically unfair. If it had existed for the last 50 years I would have retired with a giant lump sum from Kiwisaver but my hard working neighbour who had been a drainlayer most of his life would have received a much smaller lump sum. At least with superannuation I know I get the same as Winston and my neighbour who has no live-in partner gets more than both of us.
I back Top on this. Super was not designed as a universal entitlement. It was for.those old people in poor financial circumstances. Age 60 used to be a few years before death. Now the retirement can last 30 plus years. For those who say they will just spend up large prior to retirement so they don't have assets and can get super...I say knock yourselves out. Go for it. All your money will stimulate the economy and your houses can be sold to going people with families. I don't mind paying tax for super for elderly people with no assets or income. I am not that far from retirement myself but see how unfair the situation is.
Why do you want prices to go bananas, they're already nuts? Aside from the migration numbers I don't see any party having the ability to influence prices much, despite what they say. I'd like prices to stabilise or retreat while I work out how best to ensure my children are home owners at some point. If prices retreated that would likely be easier, but it goes against my multi decade experience with property to expect that to last for long. For the record, I'm continuing to vote National, because they handle finances the same way I do personally i.e. with restraint. Personally I've had enough of Nick Smith, and wanted to vote WP to 'ginger' up the election, but the possibility of him going to Labour is too higher a possibility.
As a further note, I'm saddened that the debate has failed to mention the good being done right now e.g. Social Investment. The rhetoric from the left is so predictable as is the desire to tax others into submission. Many of the proposed taxes have been implemented in the past yet repealed. Like the farming saying goes, 'don't pull down the fence until you understand why it was there in the first place"
Many people 50-100-150 years ago lived till 80-90-100, so that hasn't changed. The only thing that has changed is that more people are living longer, so the average has increased. Although apparently that could drop with all the diseases that are expected to affect more people.
The trouble I have with the UBI idea is that it just drags more people into being dependent on Government. With Morgan that's going to be everybody apparently. "Working for Families" is bad enough in that aspect. I would like to see much smaller government, much less participation in our daily incomes. Government should be a referee for fairness, not a participant in all our incomes.
The trouble I have with the UBI idea is that it just drags more people into being dependent on Government.
That's a supposition, to be fair. As much as other suppositions from economists studying the matters suggest it can incentivise productive enterprise (e.g. starting your own company) by providing a safety net. The question is whether it would increase numbers in dependence more than the current benefits do, and whether it would cost more overall once you remove admin costs associated with administering benefits and the current KPIs around kicking people off them.
I would like to see much smaller government, much less participation in our daily incomes. Government should be a referee for fairness, not a participant in all our incomes.
Problem is, this point seems to often fall away once we start talking about the UBI for folks aged 65+.
But note that the UBI does not create a poverty trap because there is no abatement. Benefit receivers currently face an abatement of 70c (or worse) on the dollar.
The size of the UBI is important too. If too large (near minimum wage) it would create a moral hazard. I don't think many people would like living on just the UBI for long periods of time.
Oh yeah here we go again, libertarian / neo-liberal values, tell you what stand for election.
Otherwise no,
a) the UBI is paid as a universal payment. If then you get a job there is no or significantly less of a barrier to taking it as the UBI isnt reduced ie its a path out of welfare dependency.
b) working for families actually reduces in-equality.
ie it is indeed a correction for un-fairness.
It's funny how the concept always gets support from both Liberal and Keynesian economists, huh.
You would think that if your supposition was correct, that definitely wouldn't be the case.
No doubt you are smarter, though.
"Government should be a referee for fairness, not a participant in all our incomes."
So, what's your stance on universal pensions?
to somad nymad. Ist Paragraph. Please explain what you are saying here. If you can't it means you don't understand it yourself either.
2nd Paragraph. Usual kind of pointed remark from nymad. But pointless.
3rd Paragraph. My stance on it, as I have proposed a number of times here, is that we have instead a universal Kiwisaver. As that grew in significance we could phase out the universal taxpayer funded pension.
While technically there may be more people dependent on government, I think there would be much more reason to work as you get paid for every hour you work. Currently for people on the dole, even if they get a job at the supermarket for 20 hours a week, they end up hardly any better off if at all so why would they bother.
I think he does care. He. Is terrible at PR. But he is willing to live or die by his ideas. My prediction is that despite the scoffing that eventually Tops ideas will be mainstream. I see the other parties taking from them but always scared to go further with their concepts. Might upset pressure groups. That's why I think Top will stay a fringe party but could be very influential. I was just reading a book by Steve Keen, admittedly an alarmist at present, but he did open my eyes to just how influential economists have been in the west since WW2.
I think he does care. He. Is terrible at PR. But he is willing to live or die by his ideas. My prediction is that despite the scoffing that eventually Tops ideas will be mainstream. I see the other parties taking from them but always scared to go further with their concepts. Might upset pressure groups. That's why I think Top will stay a fringe party but could be very influential. I was just reading a book by Steve Keen, admittedly an alarmist at present, but he did open my eyes to just how influential economists have been in the west since WW2.
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