The Brash Report: Wednesday March 10th
No. 25, 10 March 2004
A reply to critics of my Orewa speech
The Treaty issues that I raised earlier in the year had for too long been a subject we were not allowed to express a view about. I have challenged that, and as a community we have started a long overdue review of where we have got to, and where we are headed. Last week I responded to my critics, and this speech can be read at the National Party website, www.national.org.nz or on my own website www.donbrash.com. I will come back to this issue in future newsletters and provide further examples of how the Treaty of Waitangi "industry" is being used to divide New Zealanders.
New Zealand Superannuation
There is another topic that people have been similarly reluctant to talk about. How can we ensure New Zealand Superannuation is sustainable through this century as the baby boomers retire? Last week I sought to clarify the National Party's position on this.
It is essential that those who have already retired, and all those nearing retirement, can have certainty about their own entitlement - they simply don't have enough time to prepare for any change in the scheme, unless it is an improvement of some kind. My view, and that of the National Party, is that those over the age of 50 can be assured that for the rest of their lives they will be eligible for New Zealand Superannuation on the current terms: i.e. the structure where the payment to couples is set at 65% of the average wage, starting from age 65. For them, there will be no change, and their pension will go on increasing with the growth of the economy and inflation.
That is the position of the two major political parties, so that should give a high degree of confidence to older New Zealanders. I have raised this issue now because of the outrageous and frankly grossly misleading misrepresentations of National Party policy coming from our political opponents.
They have been suggesting that the next National Government would rapidly lift the age of eligibility for superannuation, would slash tax rates, and would abolish the Cullen Fund to finance what they describe as a huge tax cut for the rich. All of this is the stuff of political fantasy.
None of it is true. Frankly, I consider it a disgrace for Helen Clark and Michael Cullen to knowingly mislead the elderly, knowing that many will believe them - they seem utterly indifferent to the needless worry that they will cause.
But what about the position of those under the age of 50? I said last week that it is not possible to commit to absolutely no change in the scheme for those below that age.
The reason is simple. At present only one in eight people is over 65 years of age; by 2040 one in four people will be over 65. There will be many more retired people, with fewer working people paying the taxes that fund those people receiving superannuation. So, in another 15 to 20 years a significant fiscal problem is likely to be appearing on the horizon.
Both the major political parties have seriously misled the electorate about superannuation in the past. I do not intend to commit to something that can not be delivered.
And the reality is that nobody can, or should, commit future governments to a scheme which will, within two decades, come under some fiscal pressure. Michael Cullen tacitly admitted as much back in 2000. Another Labour Minister, John Tamihere, admitted as much just last week.
While that is a simple statement of fact, it is also true that we need not panic about this. The levels of spending on superannuation that we would face by around 2030 are no higher than several European countries are facing today.
So let us acknowledge future pressures on spending - quite considerable pressures relative to where we are today - but acknowledge also that these levels of spending are already being handled by other countries.
It is important to get away from the unnecessary sense of drama and panic that has led past Labour and National governments to break election promises, and more recently to establish, on flimsy grounds, what has come to be called the Cullen Fund.
The Cullen Fund is nothing more than financial smoke and mirrors. It does not change the overall cost of superannuation one bit, merely shuffles around the timing of the costs in a way that has only a minor effect on the mid-century burden of the scheme, and even less on the cost by the end of this century, while resulting in substantial investment risk along the way.
Whether a National Government would keep the fund matters not at all to the sustainability of New Zealand Superannuation. The fund merely rearranges the deck chairs on a fiscal ship that is heading into difficult weather. But let's not over-dramatise this: it is a strong headwind we face in 20 years time, not an impending shipwreck. We have not yet decided whether to keep the fund, although we will certainly announce our position before the next election.
While all these issues must be addressed, we have until the year 2020 or later before adjustments will need to be made. Those below the age of 50, especially those in their 20s and 30s who will be most affected by any changes, deserve to be dealt with honestly by their government.
I understand that some young people fear that there will be no superannuation available for them at all by the time they come to retire. But there are no grounds for that fear. All New Zealanders, of whatever age, can be confident that they will receive New Zealand Superannuation, but for those younger New Zealanders it is likely that the age at which they receive their superannuation will be a little higher than at present.
But they should also bear in mind that over their working lives they will be earning real incomes considerably higher than their parents earned, that they will retire with higher personal wealth, and that the real value of New Zealand Superannuation in 40 years' time is likely to be nearly double what it is currently. They face no crisis.
I intend to give a major speech addressing this issue in more detail in the months ahead.
Attempted murder in the cathedral
Last Thursday evening, Helen Clark gave an aggressively political speech attacking the National Government of the 1990s and me personally. Nothing too surprising about that - I think she is feeling some real pressure as the public becomes increasingly aware of the implications of some of her Government's policies. But what I and many others found extraordinary is that she chose Christchurch Cathedral to deliver such a highly political speech.
I am not one who objects to bishops commenting on matters of important social interest (somebody with my own background could hardly object!), even though I disagree totally with their recent statement about how the Treaty of Waitangi should be understood. But the bishops at least couched their statement in politically neutral language, even though it was widely understood as an attack on the National Party and on my Orewa speech.
Helen Clark, by contrast, delivered an overtly political speech and urged her audience (I'm not sure it could be called a 'congregation') to vote for her party at the next election. I believe that that was grossly inappropriate in a church.