Key: Even if promise not to hike Super age had been made, Budget 2012 would not have dealt with it; Happy with costs out to 2020

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.