Super Fund Will Dictate Tax And Spending Decisions For Generations

If the Government adopts Michael Cullen's superannuation prefunding scheme, no government will be able to make significant changes to tax or spending levels for the next 30 years, National Finance spokesperson Bill English said today.

"Dr Cullen is about to put his Government in a straitjacket, and I suspect his colleagues don't know it. The Cabinet - and Labour and Alliance backbenchers - need to understand that Dr Cullen's scheme means there will be no money left over for the promises Labour is already lining up for the next election.

"There won't be anything like enough money for significant changes to the student loans scheme or pay parity for kindergarten teachers or abolishing asset testing for people in long-term care - which Labour has promised.

"Nor will there be enough money for other measures Labour is hinting at, such as increasing benefit levels or rates rebates for superannuitants.

"In fact, even shorter-term spending like the pay rise for the armed forces which the Prime Minister is promising will have to be reconsidered.

"It also means there will be no room for tax incentives or lower taxes. For instance, it would be almost impossible to drop the company tax rate to match Australia.

"National has always said the public needs a better understanding of this policy because it is a huge commitment of taxpayers' dollars for coming generations.

"People certainly don't understand what the real choices are. Dr Cullen ought to make sure that at least his caucus does understand the consequences.

"The prefunding scheme will only give certainty about superannuation if governments run surpluses of about $3 billion every year for the next 30 years. This Government itself won't even achieve that.

"This is the single most important decision on what New Zealand governments will do for a generation. Let's do it on the basis of proper discussion, not back-room deals between a couple of parties," Mr English said.

Ends

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