This was simply stalling while the Banksters beaver away preparing us forsale. Show us all a transcript and audio of the meeting with David T Beers of the Standard and Poors raping agency.

They will have to sell everything to pay benefits when boomers start retiring.

Three things can potentially happen to NZ superannuation.
1 Raising the age of eligibilty to 67 or maybe 70
2 Reduce it
3 Means test it

It is likely that all three will happen eventually. Of the three, the fairest is raising the age of eligibility. The result of means testing is that those who were foolish enough to save for retirement are effectively taxed a second time. In the UK, where Brown tinkered with means testing, the person who saved for retirement effectively pays about 90% of the income that they saved in taxes. An enormous & stupid disincentive. Reducing super means that the worse-off in society move into genuine poverty, which is rare in NZ superannuitants.

Since people are living longer & healthier, a burden is being created which was never intended when Piggy introduced universal super. Piggy's cancellation of Labour's compulsory super (similar to Oz's) was of course the biggest single creator of the problem we are now facing. Remember the Dancing Cossacks?

They also need to stop blindly pouring money into the health system. It is essentially the only part of the economy still suffering from capacity constraints. More money wont buy more health system, it will buy a more expensive health system. The health system needs some innovative, rational thinking, not more money.

Matthew is on to it. Stop funding health, more people will die - fewer people to fund in retirement.

Natural selection.

This affects everyone. If you have assets/wealth in retirement, you will be paying more for the services you require - health care, security, food.

Actually Mathew is somewhat correct here. Health care in New Zealand is failing. Resources are being wasted. Health care education is a disaster and getting worse. Privatization is not the answer, but a strong bit of rational, critical thinking is.

The housing market will not return to 'normal' levels until speculation stops, and the industries involved in housing stop expecting obscene profits.

I posted this in the last thread, I feel it's still relevant here as this budget did nothing to change my opinion:

If anyone thinks that pensions or eligibility for them will be cut they are dreaming- even simple means testing, to stop millionaires getting handouts, was shouted down in the 90s. Key has promised to keep the gravy train going ad infinitum.

The voting power of the "˜pig in the python' will require that taxes are raised dramatically on Gen X + Y. Despite owning most of the wealth in this country, the Boomers will still demand decades of gold-plated pensions and unlimited high-tech healthcare as their birthright, and if everyone else has to be taxed to oblivion, so be it.

The financial gap between the generations has never been so stark- Gen X and Y have negative or zero net wealth thanks to low wages, student loans and massive mortgages, while the rapacious Boomers own everything and still want more. The gap has got so bad it's getting to the point of intergenerational strife- younger people are voting with their feet at a a record rate.

quote Philly "Piggy's cancellation of Labour's compulsory super (similar to Oz's) was of course the biggest single creator of the problem we are now facing."

Cullen Fund was to be remedy. Where did English see a problem in borrowing at low government rates and investing in solid private enterprises for the long term. Particularly when share prices are kinda low.

Perhaps the fund name was the problem not the strategy.

I think this budget was a balancing act and they have acheived that. Some things not said in there will happen. Look to Public/private partnerships for all sorts of things as Govt leverages off the private sector for more growth and jobs. I also think that for the next election we will see a mandate being asked for Tax reform. I hear that of every dollar taken for WFF 25 cents goes on IRD admin. Sort that out and all of a sudden you free up cash for things like....Super.

PS Words fail me to describe what I think of Michael Cullen and what he left us with. "Scorched earth" indeed.

Veedub,

You're right about most New Zealander's being unable to understand retirement planing. Yes, we can blame it all on the people for being unwilling, ignorant etc. I tend to blame it on the industry and government, who for decades have been brainwashing the people into buying, digging themselves deeper into debt in the name of higher GDP. It's a keeping up with the Jones's routine, except the Jones's are the U.S. and the U.K. A game New Zealand will lose every time.

Saving for retirement would be easy if interest rates for saving were kept at decent levels and that income earned on that savings wasn't taxed. There would be no need for Kiwisaver .

With roughly 54% of take home pay going to service a mortgage alone, (down from roughly 80%) and food, and material goods being among the highest in the OECD, I see no way that the common Kiwi and take responsibility for their own retirement.

I think a contibuting factor to the state of the economy is our addiction to "handouts".

What is wrong with individuals saving for retirement, rather than depending on government superannuation handout?

What's wrong with people taking a little bit of an effort in eating well and keeping themselves fit and healthy rather than being a drag on the health system?

Why can't people buy their own insulation for their houses (they can somehow afford to buy playstations and LCD TVs)?

If the age for National Super had been raised and/or the amount lowered, the reaction would be even more baby boomers rushing out to buy houses to fund retirement. That isn't a desirable outcome. Who can predict the future with precision, Treasury's track record is not great. Given the level of the credit crisis and global recession, Bill English did the smart thing - no radical changes. I suspect changes will be made in the National government's second term, when they will be able to better forecast out based on actual results through to 2012. If Labour had been in government, think about it, no April 09 tax cuts, probably a tax increase, spending targeted at their voters - those "real New Zealanders" as Mr Cunliffe terms them.

NZ's major philosophic problem is welfarism and the now ingrained welfare mentality in the minds of the many. It's lethal, it now enslaves the productive to the parasite, and this budget grew the problem (the State) and at the one time it would have been ideal to attack it. I just can't believe WFF was even left alone in its current offensive form: there are few more examples of a more blatant theft on the statutes.

And again, a CGT does not solve the revolution that needs to happen in peoples minds, a CGT is just more slavery to the Big State. National have proven themselves already to be just another bunch of lousy, socialist Keynesians who believe they can grow an economy by government spending (on borrowings and what will have to be future tax increases!), which they cannot. The way out of this is a small state, small public sector, tax cuts to the productive, and private sector savings going into production (not spending). And that is also the way to a society that embraces freedom of its citizens from tyranny.

That budget was counter to every 'what we are about' published on the National Socialists Internet site: again, I call for English's resignation forthwith.

Well as a baby boomer near to the supposed and promised retirement age I say most you Gen y etc mob are selfish little prats.
In my working life I have endured 4 recessions of note, lost everything I had and started again just when you were starting. I don't yet have Sky or widescreen TV, have always had my own Health Insurance, still don't own a new car and still have mortgages to pay before I can retire.
I have forgone the overseas holidays,the opportunity to send my very bright kids to uni because we never had the money and there were no free schemes like those that YOU collect at my expense. I had a basic education and went to work in a trade and owned and operated various businesses until I lost them in the 89-96 recession.
You by contrast have grown up in peaceful times, your parents never (in most cases), went off to war, some not to return, most of you never lived till you were late 20's and thirties before you owned a car, most of you have gone off to work at incomes I only dream off.
And just to finish us off you think you are entitled to restrict the very pensions that we paid to support and which you have spent in your selfish lifestyle.
Adding even more insult to that belief entitlement most of you stand to inherit the money and assets that your parents accumulated in their life times. Sums in many cases that will allow you to never have to work again.
If you doubt that ,one of the reasons that house prices have gone up so much is that many of your peers have already inherited some of that money and when you inherit a lumps like half a million upwards you have spent it on lavish housing, travel and all the goodies.
Are you not a selfish lot? eh

Sorry, Viking, I'm a baby boomer & can't agree with you. We had (nearly) free tertiary education, great opportunities for advancement, years of peace & stability. But we have failed to save sensibly, instead ploughing into housing & rental properties, cutting the Gen X & Ys out of the housing loop. My sympathies are with that latter generation.

However, I also disagree with those who say that baby boomers will get full benefits when they retire, to be paid by the following generation. It's just not economically possible, the $$ won't be there, we can't keep borrowing more as a country. If you are a baby boomer, get used to the idea that there won't be generous super for you, or the range of free services you have been used to.

Kiwisaver signalled the death nell for universal super, its just a matter of time. Why would the govt subsidise some people for their super (thru K'saver) & then pay them the full super on top of that. It does not compute

Roads. There is going to be plenty of spare capacity in roads sooner than you would even dare to dream of.

Don't believe me?

Read the latest IEA report to the G8 energy ministers over the weekend.

Oh yes plenty of spare capacity coming our way soon.

Money that is currently being ploughed into roading mega build outs should be stopped and put into Super Funds.

The gold plated roading infrastructure buildout will in the fullness of time will be our stranded asset's returning very little.

This Government (in fact all Govt's) needs to address energy, and not to glibly assume that it will always be there and in the vast cheap quantities that we have grown up with.

@Darren

Those Boomers are going to keep voting for whoever maintains the all you can buffet table that they as a cohort have had all their life.

Until they die off and out - that voting block is going to take some overturning.

Massive rump of voters.

Any more suggestions?? Yes - a spell checker and time spent learning grammar.

Mark H - agree with you on reducing size of gov., dealing with waste. Re. CGT etc, from:

http://www.interest.co.nz/ratesblog/index.php/2009/05/22/opinion-the-mer...

".....the IRD has estimated a flat tax rate at 23% would be revenue neutral. [lower with reduced gov. size]

Who wouldn't want that?

And why wouldn't you want it?"

and Gen X & Y'ers:

"...we really do need to change, because not doing so is simply sustaining a kind of "˜economic cannabilisim' - with the old devouring the future of the young...."

The discussion progressing here underlines this observation, yet again. We need change that does not embitter two generations toward their parents and that generation. If X & Y don't have to leave NZ to get ahead because they can stay here with high-wages derived from a higher value-add, broader economy, then maybe they'll not also begrudge the tax to be paid to allow 'boomers' appropriate retirement, who funded X & Y's education and healthcare. BUT, who don't seem capable of a suitable "revolution" in mindset, and trust, to allow policy change that would see high potential X & Y'ers prosper - hence my term "˜economic cannabilisim', which in the end may also devour the future of 'boomers'.

@Les - Very nicely put.

Things have to change - to continue on the current path will get ugly. When you start having arguments about how to cut up the cake, you need a bigger cake.

Incidently, seen Les mentioned the 'higher value-add' economy. Does anyone have any ideas on what you do with the 'low-skill/low-value' workforce while you make that transition?

I own and run several small software companies, neither of these will ever be big employers of low-skill workers. In fact the prospect of doing 10's of millions of dollars of business with less than 6 staff is very real and attractive.

Harry Says:

"Bernard, 2020? My father is in the first wave of baby boomers born post WW11 and he's retiring in 2011. Shouldn't that date be brought forward a few years, please explain?"

It seems people havnt done their basic sums or have no idea who the baby boomers are

Baby boomers are already retired or retiring, the last of them will be retired in the next 5 to 8 yrs... and dieing off.
Buy the time 20 yrs are up we will all have reached our use by date and died....

Darren - some possible answers to your question here:

http://www.interest.co.nz/ratesblog/index.php/2009/04/15/opinion-how-tou...

The approach is 'pluralistic' based on recognising a national economy as a 'complex adaptive system' and what 'emerges' is what get's market pull. That can mean the lower-skilled/lower-waged have a place on a 'journey' with the 'whole' as we transform over time - especially if our exchange rate could reflect real trade flows instead of mainly speculative money flows, and that could come about with appropriate monetary policy and tools, see Number 6. [Apologies for the possibly unfamiliar fluffy jargon.]

I think income splitting (or what ever the correct term is) should be introduced. i.e. where only one partner works, the partner's income can be split between the partners to acknowledge the equal contribution and to reduce the tax liability. Further to this, income could also be split with dependents to acknowledge their contribution to the family environment as well. With this introduced, drop WFF.

This budget reflects the ongoing failing of our form of Democracy. Voters will not accept bitter medicine, they will accept intergenerational theft and robbing Peter to pay Paul ( if they are Paul).

This applies to most if not all Western Democracies. I figure we will just stumble along for a while yet until it all becomes so unsustainable it will crash.

The way these virus aliens are mutating, we are quite likely to cop a dooozy of a bug and wipe out everyone over 70. That would sort the super problem out.

Right on Waymad.

MMP makes it so much worse.

You and I can be benevolent co-dictators. I bags Mondays, Wednesdays and Fridays.

cheers
Bernard

Changing the age of retirement isn't the answer - there are plainly too many old farts in positions of responsibility at the moment!!!!! And National keeps bringing them back. These 'captains of industry and finance' have a way of thinking that created the mess. No forward thinkers amongst that lot!

Change the criteria for VOTING. If you want to collect national super, you lose your vote!

Sounds radical for sure, but it's the only way we'll start looking toward the future! It will also 'scare' a fair few 40-50 year olds into saving for retirement.

Waymad, Bernard, veedub - we aren't the only ones that see our constitution/electoral system as responsible for some of our problems. I've referred to:

Culture and Prosperity: the truth about markets "“ why some nations are rich but most remain poor. John Kay, 2003, Harper Business.

(review of this book on the top part of this page on the MEA website http://www.mea.org.nz/events.aspx )

in other blogs and John Kay sees absence of a second house as one 'root cause', quoting from my book review:

"John Kay argues that one cause of New Zealand's slide to poverty has been the opportunity to follow approaches that, given greater proximity to rich countries (and a desire to emulate them) may not have been considered. In other words, once the umbilical with New Zealand's main market (UK) was cut, New Zealand could be different, because it could. In particular, with no second house and the associated checks, balances and damping in policy making, it appears on reflection that illegitimate decisions have been made with great loss. We still suffer from these it seems and the decisions were probably never properly debated and contested as they may have been in countries with a bicameral legislature."

Also, Matthew Hooton with "Parliament Needs a Handbrake", Sunday Star Times, 23/11/08. (I can't find it on the web, sorry.)

Sure other countries have a second house and have as many problems as us, but in dispensing with our second house, maybe we lost the capability for sufficient 'damping' to allow a situation where MMP looked favourable, especially as NZ's second house had been a crock. Except now we have the worst of both worlds, with MMP leading to an environment where necessary leadership is stifled and where a lot of important debate/issues are dealt with in 3-yearly election campaigns that are muddied by tax-cut/benefit promise trading focused on little more that what will be in hip-pockets for the next 3 years. In the last case, with our hip-pockets being filled with repeal of the R&D tax credit that got nil, if any, real debate while it sat in the margin of the manifesto being completely over-shadowed.

So question is, regarding the forthcoming Constitutional Review and referendum, given the system we have, will we actually get some sensible well dimensioned debate to change said system; a system that benefits some in influence who are interested in maintaining the comfortable status quo, and who will face the prospect of less influence with alternative systems?

Kate - that is what I meant by "well dimensioned debate" The 3-year term needs consideration too. Perhaps the sense of distrust that makes a 3-year term seem appropriate could be counter-balanced by an effective second-house?

Hey Realist - stand for parliament, I'd vote for you on that idea alone! Seems like a win-win situation.

While on the subject - I just saw Keith Quinn on a retiree-type commercial - yet we still have to put up with him as the boring commentator that he's always been, even when younger. And then there's dear old Murray. Move them on - get some fresh blood in the commentary box to match the youthful enthusiasm on the field.

Well I'm assuming there still there anyway - gotta admit I pretty much lost interest in rugby when we got sick of Sky's monopolistic behaviour.

Kate, only young people are so arrogant as to think that young minds are sharper. Most young minds cannot add up in their heads, need a computer or calculator for most stuff that we dull brains have been doing in our heads for years. And another little piece of wisdom for you.

You can act and behave and pontificate in your "young" mindset but the truth is that if you are lucky and manage to make it to an older age then you too will be left wondering what happened to all those years of your life that you spent working hard, being defrauded etc etc. You will be siting there one day wondering what the future is for you now that you are no longer young and good looking and cool and now the upcoming smart arses consider your value in the community as next to nil as they satisfy their lifestyle by increasing the cost of living on the mortal coil beyond your capacity to earn at age 70.

It will be interesting to listen to your thoughts when you turn 70 or 75 which will be the retirement age when you get there and you still consider that you have a life ti live.
Intergenerational theft is bullshit. Every generation is better off than the last one. You earn way more than your parents and grandparents. You have a better lifestyle, better health, indeed an altogether better life. But you don't know that because you only know what you know and what you know is the sum of your own experiences.

That sum excludes the experiences of the generations before you and to put that in perspective, did your generation develop the computer chip, did they invent antibiotics, did they invent anything that we currently use. The answer is a resounding no for they were simply not old enough to invent much at all, and before you explode in indignation I'll put it to you this way. There are no new laws of chemistry or physics that I am aware of. Everything else is derived from those laws and are in someway an adaption of those laws and chemistry. That they have been used to improve the quality of life on the planet is without doubt and we have all had a hand in that, including us dumb old farts. )without whom you may not even exist or if you did would most likely be living in a stoneage way.)

@Kate,

just because some-one is old doesn't mean they don't have anything to offer. In many cases some of the best business people, thinkers, writers etc are those in their late 60's.

And my theory is for those that don't wish to retire. They can work for 1, 2, 3 or how many ever years they want and still contribute. My father is 70 and for the last 5 years could have provided valuable advice, thoughts, insights to his previous employers, but they weren't interested. And he saw no point working any further. With say a
$5k bonus at the end of each year, there would have been more financial incentive and he sure woudn't have been as bored as he was.

Naturally there are plenty of jobs where 60 or 65 is getting too old, but there are others where even 70+ can be done. I sure Michael Parkinson, Sean Connery and even Mick Jagger have something to offer post 60/65.

@Kate, well maybe slightly kidding, but they are good examples of people who still have something to offer in their respective fields. I don't believe that at 64 and 364 days someone is a valid employee with lots to offer and then a few days later at 65 plus all of a sudden its game over.

And though bored retirees should get out and do things to benefit the community, I'm thinking from purely an economic/fiscal perspective. How to reduce pension costs, maintain the tax base and still allow those who wish to retire to do so. It's purely on a voluntary basis but has plenty of good points.

And I'm never too convinced about the higher education argument. Just because some-one has a higher education doesn't always ensure they have something to offer. In this day and age its can be seen more as an ability to pass exams, troll the internet and go to lectures....

It was your good fortune to be able to retire so well done. Some of us though didn't quite manage that. I maybe could have but i would have been dependent on Govt. super to survive. I am much better than that and I just hated being poor. Still am a bit but a fair lump of asset now that will be a backstop.
Still lots of interesting things to do and best of all I have never had to take orders from someone else for my workday.
With a reasonable lift in the confidence and a lift in the market and I will be selling the fulltime work and concentrating on having fun selling products that we are developing.
Can't wait. And I am well into the sixties.

P/S Watched Micheal Parkinson being interviewed last night. Great example of an older male. See why he was so successful at his chosen career.

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