Bill English has kicked off the roadshows to sell National’s superannuation policy to the public, telling an audience that it was easier to announce a rise in the Super age during a period of economic confidence rather than during fiscal hardship.
The Prime Minister even managed to get in a couple of digs at Super policy across the ditch, labelling Australia’s system “complicated” and “unfair.”
Speaking to the Kapiti Chamber of Commerce on Thursday, two of three questions in a Q&A session after English’s address related to the Super policy. (The other, incidentally, regarded cycle-ways: English said he thought former PM John Key’s cycle policy was “a joke” at the time, but that he had since been proved wrong).
Why not move sooner?
One question came from a financial advisor who said she had spent the past week at retirement income seminars around the country: “The overwhelming response to the changes in NZ Super is, why are you waiting 20 years, we need to get this pinned down, we know we need to make this change – let’s just do it,” she said.
That was followed by questions about whether the government would introduce means testing and surcharges. “There’s a lot of fear out there about what’s coming next,” the financial advisor put to English.
English said National believed it had got the balance about right. Going faster and harder in raising the age would create anxiety among people who had already planned their work and income paths towards 65, he said.
“I’ve been the finance minister for eight years. If I thought there was going to be a fiscal crisis – a government spending crisis – because of Super, we would go faster and harder,” he said. “But because the economy has grown better, and more older people are working, it’s less urgent. But it still has to happen.”
English said he was “quite happy to see a public debate about whether we should go farther or faster,” and around the policy in general. The debate and election outcome may mean there was more political agreement on the policy after the election, he said.
With respect to means testing and asset testing, that was not going to happen, he said.
“I think there’s a very broad political consensus that [the] universal system is working. And the evidence it’s working is the increased rate of working [among] older people, which is much higher than it is in Australia.”
Australia had very complicated compulsory Super, with means testing. “It’s no cheaper than our system actually, and more and more of them are knocking off work at 55 at the upper end, but more of the lower income ones have to work longer. In my view it’s an unfair system,” he said.
Good position to tackle the issue from
English had earlier told the Chamber that superannuation was not set to be as big a burden as previously thought due to more older people working. Either in the 65 to 70 age group or 60-65 (he was speaking off the cuff), in the early 1990s 11% of that cohort used to work, and now it was 45%, he said.
Government surpluses meant New Zealand was in a good position to choose how to tackle the issue. “Across in Australia, their debate for the next 10 years will be how to cut spending, because they’ve got big and growing deficits. And it’s not obvious how they’re going to turn that around,” he said.
New Zealand was one of only three countries with unemployment under 5%, government surpluses, falling government debt and an economy growing at 3%, he said. “I think the other ones are South Korea and it might be Iceland. We don’t necessarily want to be like Iceland.”
“We’ve got these surpluses, and this sense of confidence,” he said.
“We were not under real pressure on the government finances, because they’re in good shape. You always make better decisions when you’re not under pressure, and it is a long-term issue so we’ve got a long lead time.”