3 June 2001 Media Statement

Partial pre-funding is the best way to make Super secure

"The Alliance supports partial pre-funding of Super because the scheme we have negotiated with Labour is the best way we have seen to ensure that Super is secure," Alliance leader Jim Anderton said today.

"The Alliance supports taxpayer funding of superannuation at a base rate of 65% of the average, ordinary time, after-tax wage. The cost of that policy has to be met either from putting something aside today or from higher taxes. Clearly we did not get a mandate for higher taxes on the wealthy, so the we have to pre-fund some of the costs of Super or the level of Super will be cut in the future.

"Opposition parties that oppose the Government's partial pre-funding of superannuation either stand for higher taxes or Super cuts."

Jim Anderton said it is a cop-out to say the super contributions could be used today to pay for tax cuts, or for social and environmental programmes.

"Splurging the Super contributions would be inflationary, it would lead to higher interest rates, and it would increase the current account deficit – which means more overseas ownership of New Zealand.

"The Alliance strongly supports increased investment in social programmes, and especially for better health care and to reduce tertiary fees. But we recognise that it requires a greater contribution in taxes from the wealthy.

"Trying to pay for the health system out of superannuation is just about the worst option I can think of."

Jim Anderton dismissed suggestions that partial pre-funding fund is like borrowing on the mortgage to play the sharemarket.

"It's more like a household that has a mortgage also saving through a personal retirement plan. There are hundreds of thousands of households like that, and it is a very sound strategy," Jim Anderton said.

ENDS

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