Scare stories are starting to reappear about the alleged unaffordability of national superannuation.
Right-wing commentators and big business advocates want to see government spending on any welfare that goes to the people as of right slashed.
It doesn’t matter that New Zealand’s scheme is actually one of the cheapest in the advanced capitalist countries in terms of net cost as a percentage of GDP and will remain so for the foreseeable future.
The resignation of the previous Prime Minister John Key has seen the attack dogs unleashed. He had sworn never to raise the age of eligibility. His replacement Bill English promptly abandoned that policy within days of his appointment.
One of the critics of current eligibility rules is the recently appointed Retirement Commissioner Diane Maxwell. She wants an increase in the age of eligibility to 67 and an increase in the residency requirement from 10 to 25 years. This may seem a bit surprising but she came from the banking and financial services sector. She had a senior role at the BNZ at the time it was found to have deliberately avoided taxes to the tune of $645 million dollars.
It is a bit rich for tax cheat to lecture us on affordability!
She claimed the number of people on national super would double over the next 30 years and net annual cost would triple from $11 billion to $36 billion in the next 20 years.
This is completely misleading. It is using devalued 2036 dollars against 2016 dollars. The real cost can be measured more accurately as a percentage of GDP.
The current net costs of national superannuation are about 4.2% of GDP. The average for the OECD group of countries is 9%. New Zealand’s costs will reach 5.8% in 2036 and 6.1% in 2050 and 6.7% by 2060. It is affordable and will remain affordable forever.
By 2060 New Zealanders will also be producing two to three times as much per person as we do currently if current average productivity improvements continue.
The problem we have is that the benefits of that productivity increase are being captured by the wealthy elite.
Max Rashbrooke , editor of Inequality: A New Zealand crisis, calculated that “In 1986, the top 10 per cent took home 26.5 per cent of New Zealand’s income. In 1999, it was 37.8 per cent and in 2004, it was 33.2 per cent.”
Big business just wants to cut any government expenditure that isn’t going to directly subsidise their profit making activities. This has led to a slashing of the number of people receiving a benefit as a percentage of the working age population from 13% to 8 % when unemployment only fell on average from 8 to 6%.
The bosses would like to achieve similar cost cutting from old age pensions but because it is a universal entitlement it has been harder to cut without provoking a political storm. We should continue to fight to protect national superannuation. It is effective. New Zealand has one of the lowest rates of old age poverty in the world. That is a good thing and worth defending.
Unfortunately (or fortunately, depending on your perspective), the entire global financial-economic system is doomed to collapse long before 2030, and very likely to collapse quite a while before 2025, since the entire system is predicated on burning around 90 million barrels of oil a day -every day of the year, forever. Indeed, to function ‘properly’ the system has to burn more oil every year to provide the economic growth that is necessary to keep the Ponzi financial system going. All of which is clearly mathematically impossible and ecologically impossible.
Whether it will be global depletion of liquid fuel supplies or the effects of burning oil that will bring the system down is still not entirely clear. The next 3 years will almost certainly clarify both matters.
The game politicians and the media are playing at the moment is to continuously lie to the masses and convince them the financial-economic-political system has a long term future….which is the same game they have been playing since it became abundantly clear around a decade ago that the system has no long-term future.
By any metric in the REAL WORLD the situation is terminal, the extraordinarily low ice cover at both ends of the planet, as the physical world responds to record-high atmospheric CO2, being perhaps the most critical.
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It never ceases to amaze that people STILL think in terms of the financial system in isolation of everything else that supports it.
There is one thing we can be sure about: the lies politicians and the mainstream media tell over the next few years will be in proportion to the increasing severity of the predicament.
just another reason why we should have a livable UBI
Giving tax cuts to transnational corporates and the major tax dodgers, then cutting contributions to the Cullen fund designed to smooth the bumps of future payouts for the small period of “baby boomer” ageing ( this will include many immigrants now welcomed to increase consumerism while we subsidise them all the way through till death), is utter hypocrisy.
The Currie Commission gave our future old age provisions by way of a pensions, a clean bill of health but that conclusion was retracted from the media shortly after the first publication. Nothing has changes only the hype and greed of the controlling wealthy sector and investor state.
Both NAZCT and Labour have lied profusely about this issue.
The investor state would no doubt prefer a privately run contribution scheme where money captured from the public could be gambled with and disposed of at will. In the USA 2008 saw many pension schemes collapse leaving life long contributors penniless. Kiwisaver is a similar scheme with state “enforcement”. Getting rid of state backing seems to be the agenda.
A strong state owned pension scheme is the security which is vital link to population control, family size and many other socio – demographic consequences of having a strong degree of equality and fairness / justice.
The jobs are not there at present to employ more elderly and job numbers will continue to decline as mechanisation expands to reduce wage payments.
The unemployment benefit has replaced the former pension for many as the age of pension eligibility has been ramped up. Those elderly are just forced to live on less and suffer increased stress.
The failing deliberately underfunded health system, now makes many services almost impossible to access and so private funding becomes the load of many aged on a unemployment benefit, at a time of life when health issues are more likely to arise.
Conversely the private medical schemes are expanding and doing well supported by long public waiting lists. Also DHBs having to divert tax dollar to employ private “providers” as DHBs have insufficient funding to build state owned health infrastructure.
A simple operation such a cataract procedure is near impossible to get through the public system and costs many thousand with private “providers” who give little or no back up if it goes wrong. Fred Hollows did these ops for a few cents a time.
A Kiwis long span of tax contribution since first employment, is gobbled up with massive tax reductions for the rich while the dependent poor and elderly have their security and health threatened.
Job training has almost disappeared from state services and tertiary education yet we import labour on the grounds of needing skills.
User pay education and loan schemes guarantees a fall in educational achievement by young Kiwis and our drop out numbers are increasing.
Tertiary education funding is effectively cut, and now meeting budgets is dependent on recruiting over seas fee paying student many of whom will gain residency with all the negative consequences we are seeing unroll.
We need to lower our pension age and provide more engagement with state run social services, training schemes and adjust the tax rate accordingly.
All we need do, is stop using these fictional tokens and everyone can have anything they need, forever.
Mike;
A good analysis again.
Your figures show there is no need to cut anything as our scheme is in good shape.
The part that angers me is the rhetoric about the ‘baby boomer’ swell in numbers.
Governments have known about the bubble for 50yrs.!!
The reason given by Helen to start the NZ Super Fund (Cullen) was to PLAN
for this.
Any Gvt should have done so.
But when Labour finally did so,albeit at a late stage,what does Key do as soon
as he got to govern? Cancel the whole thing.!
Have the payments restarted?
NO. Instead we BORROW for tax cuts.!!
TPTB do not want ANY country saving and funding for itself.!! The Bastards.
Time to change this.
Cheers.
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