Cullen’s Feel-Good Super Scheme A Cruel Hoax
Thursday 9th Mar 2000
Media Release -- Social Welfare
Michael Cullen’s super scheme hinted at in yesterday’s Budget Policy Statement is being labelled a ‘cruel hoax’ by ACT Finance Spokesman Rodney Hide who says the money today’s taxpayers pay in for their retirement in good faith will be paid straight out again to today’s elderly.
“New Zealanders have been deceived time and time again by politicians promising to save their taxes to ensure their security and dignity in retirement. It is the cruellest of political hoaxes and Dr Cullen wants to inflict the same deception on not just the baby boomers, but the younger New Zealanders who will pay their taxes into his fund.
“To make it worse Labour’s policy of high taxes penalises New Zealanders who are trying to save for their own retirement.
“Michael Cullen’s scheme is no solution to the country’s pension problems.
“Dr Cullen’s scheme is a Ponzi scheme – named after Charles Ponzi – because the dedicated tax does not stay in the fund but goes straight out again to fund existing pensions. If anyone other than the Government was planning to hawk such a scheme they would go straight to jail for fraud.
“The other problem is one of simple financing. Michael Cullen proposes building up the fund instead of paying off government debt.. This is like a householder saving for their retirement while servicing an expensive mortgage.
“The interest cost on the Government’s debt is 7.5%. It’s hard to see Cullen’s appointed guardians earning such a return on the state-super fund. The result is a net destruction of wealth.
“The best thing Dr Cullen can do with any surplus cash is to pay off existing debt,” said Rodney Hide.
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