By Simon Upton
Michael Cullen’s 'Super Fund' is far from a done deal. Despite its prominence in the Budget Policy Statement (which talks about establishing the fund in time to stash $600 million into it before the end of the next financial year) it was clear to Bill English, questioning the Minister in the Finance & Expenditure Select Committee yesterday, that this gizmo is missing all sorts of cogs and levers. For instance:
The Government has not
considered how, when or to whom the fund would actually pay
The Treasury and the Minister have quite different views on how this fund of, in time, over $100 billion will be represented in the Crown accounts
The Minister is playing with the idea of making the NZ (as distinct from the foreign) earnings of the fund tax free as a way of solving a political problem that could emerge if the funds all went off-shore but no work has yet been done on the hugely complex tax implications of this proposal
The reality is that there is no political consensus around establishing such a fund. While the Government may be able to claim mandates on all sorts of things, this isn’t one of them. Only one party, Labour, went to the country on a platform of trying to pre-fund future superannuation. To convince Labour’s allies will be hard enough, let alone an Opposition that is deeply sceptical about whether the country can save its way out of a demographic phenomenon – and even more sceptical about the wisdom of entrusting a government fund with billions of dollars.
Michael Cullen was probably pleasantly surprised by the editorial comment his plans attracted. But much of it was of the 'better to do something than nothing' variety. In reality, there has to be a cross party consensus if 'something' is to be done, and there isn’t one on a super fund.
A more modest approach might yield a more fruitful outcome. It’s interesting to note that both the Alliance and National are firmly committed to some sort of Accord process – if only to get the facts out in the open and regular, independent reviews bedded down. Jim Anderton has always had a constructive approach to this issue.
Even more interesting is the fact that both parties see considerable advantages in the simplicity of a universal, taxpayer-funded pension. It has been overlooked by all commentators that National’s 1990 policy committed National to just that. Where we differed with others was our assessment of what guarantees could be given about its long-run level.
What we can afford to pay out in 2030 depends on how productive our economy is then. It doesn’t matter how much we save. It’s a question of the quality of our investments and the productivity of our economy. That’s where the Government’s focus should be (and higher taxes and rigid labour laws are not a good start).
Paying back debt is what most citizens do as they approach retirement. The same logic applies to the government facing the retirement bulge. One estimate puts the cost of saving up surplus taxes instead of paying back debt at about $11 billion over the period.
A more detailed analysis of my views can be found at www.arcadia.co.nz under the Articles heading.
Where will we all end up? If the Government has any sense it will quietly back off the fund and convene a multi-party process backed by independent analysis. The $600 million ear-marked for the fund can be allocated to debt retirement in the meantime. I think the prospects for a multi-party agreement are quite good. After nearly 30 years of knee jerk decisions I’m almost prepared to believe that there’s an outbreak of sanity in the offing.
Much will depend on the Government’s ability to make a graceful exit from its plans. But it was surely significant that Dr Cullen answered questions from Bill English in the House today in the conditional tense. Dr Cullen is a careful wordsmith. It was no accident.
Your safari guide failed to file a report last week. It wasn’t for lack of news.
Anthropologists were on the point of ringing Richard Leakey last week when the Gamekeeper (Mr Speaker) made pointed reference to a Neanderthal interjection. A real live human fossil would have been the scoop of the century. Alas, it turned out to be Rodney Hide.
The herd has been increasingly defensive as the great migration leftwards proceeds. There are just not enough trips to the watering hole or other corporate entertainments to explain the absence of some ministers from the House. Convalescent absence is the only explanation.
Things are looking pretty sticky on the health swamp at present with Tariana Turia leaving the leafy margins of the Moutoua Gardens to graze amidst the vast marshes of the health vote. Rather than stick with the herd she has courageously decided to fly the flag of Maori co-purchasing of health services. This is squarely against the wishes of her senior minister, Annette King, who was happy to stay behind the protective ranks of the battle-hardened front bench warriors. It fell to Michael Cullen to lower his tusks and spurn the thoughtful suggestions of Wyatt Creech who felt sure the Minister, had she been present, would have wanted to be as transparent about this little spat as she says she is about restructuring the health service (all over again).
Herd and predators alike felt much more chummy when a dweller from the mountain tops came down to make enquiries about the police should go about keeping marauding groups of demonstrating visitors from disturbing the animals’ grazing. Sue Bradford asked Police Minister George Hawkins what the Government’s policy was in relation to “nose holds, choke holds and similar tactics” when dealing with demonstrators.
Mr Hawkins mildly observed that the Government didn’t have a policy on these arcane arts but said he would be very happy to take advice from the member on such matters. Ms Bradford snapped up the offer like hot bean patties. But it was the Gamekeeper’s face that was most revealing . One could see Mr Hunt mentally applying a nose hold to the likes of Messrs Hide, Brownlee and Mallard.
But the ritual display of the week undoubtedly went to ACT leader Richard Prebble who managed two superb points of order without being filled with elephant shot by the Gamekeeper. The first asked whether the Institute of Policy Studies should be allowed to hold a seminar on the future of our constitutional arrangements within the precincts of the House when some of the papers to it advocated the destruction of the constitution. Mr Prebble smelt revolution in the air and wanted the cellars checked for explosives. The Speaker was effusively polite.
When the Speaker subsequently sought to deny Mr Prebble a supplementary question because of a moment of Neanderthal regression on Mr Hide’s part, Mr Prebble invoked the tyranny of Nazi Germany to challenge the Speaker. What standard of collective punishment allowed the Speaker to punish him for another’s transgression (and in truth Mr Hide probably couldn’t help himself). Mr Speaker thought better of re-opening the Nuremberg trials with himself in the dock and let Mr Prebble proceed. The wily old tusker revealed yet again why he stays near the top of the food chain. Warnings have been put out to the stragglers in the government herd not to venture out after curfew with such a deadly foe roaming the valley.
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