Comment: Key’s slow route to retirement at 70

Comment: Key’s slow route to retirement at 70

by Pattrick Smellie

May 11 (BusinessDesk) - By putting some otherwise politically unappetising reforms to the KiwiSaver scheme on the agenda for the 2011 election, John Key is showing his critics how he intends to break his promise about raising the pension age.

He’s putting the KiwiSaver changes to the vote, and letting the chips fall where they may, having decided that a few big social policy gambits of the spend-thrift 2000’s had to go under the axe and that he can win that argument with the public.

The plan we’ll see in next Thursday’s Budget will put the burden of saving more squarely on workers and their bosses, instead of being topped by government funds that are borrowed, often from offshore. Key’s gambling people will get that, and knows that some will drop out of the scheme, but also that on balance the shift will probably raise national savings slightly – a good thing.

At to his presumption that we won’t mind by then because the recovery will be in full swing, there’s plenty of evidence for that, but he would say that, wouldn’t he?

The flipside of the measured fiscal austerity stance that Key argues today is the ever-present threat of the next global financial markets meltdown, pushing New Zealand a little closer to the whirling blades every time because of its high private foreign debt levels.

New Zealand has no say over such cataclysms, so the prudent thing is to keep battening down the hatches and hope the good times do, indeed, roll.

But that still leaves the matter of the retirement age, the bugbear that Key has dodged by saying there will be no change to the pension age while he’s Prime Minister.

Well, if you could convince people once that prudent pruning was the right thing to do, could you not do so again? The fiscal pressures New Zealand faces on the way back from today’s debt mountain won’t have disappeared in three years’ time. Meanwhile, everywhere else in the developed world will be raising their retirement ages.

To the disappointment of fans of the “crash-through” school of economic policy-making, Key appears committed to making major changes “steadily, progressively, and by taking people with us”.

“That is in contrast to the point of view that says economic reform should happen all at once, involve a lot of noise and conflict, and follow a strict adherence to ideology rather than what works,” he told his Wellington business audience today. “I believe sustainable change happens over time, building on itself year after year, with the general support of the public.”

Watch this space.

(BusinessDesk)

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