Peters Speech - "Preparing For A Golden Age"
Rt Hon Winston Peters Associate Minister for Senior Citizens Leader New Zealand First
28 March 2006
An address by Rt Hon Winston Peters to the 7th Annual SuperFunds Summit, Tuesday, 28 March 2006 at 4.15pm at the Intercontinental, Wellington
"Preparing For A Golden Age"
Thank you for your invitation to speak to you today.
They say there are two certainties in life – taxes and death.
Well there is a stage that in most cases comes before death – its called the golden years.
It is the time when the body doesn't move quite as fast as it used to, when the mind doesn't work quite as well as it used to and where both of these facts don't matter quite so much any more.
For most of us it is a time which will inevitably arrive – but which if it is not planned for can be a difficult and less than golden time.
We have just recently completed another census.
One of the many demographic trends which is sure to emerge from this census data is the fact that we – like almost every other developed nation – have an aging population.
This has significant implications that cannot be ignored by governments and policy planners.
And the implications run far deeper than the raw demographics.
On the surface it is the sheer volume, particularly in relation to the rest of the population, of those entering or currently in their golden years which presents the most daunting challenge.
But behind these raw figures lies the attitudinal shifts, particularly among those of the post war baby boomer generation.
This generation, which is currently on the brink of reaching retirement and is colloquially referred to in some circles as "generation Jones", is quite different from those generations that have gone before.
They have different expectations – different world views.
For this generation, unlike the generation before them, expectation about quality of life will matter far more.
And with this the expectations of what quality of life actually means will also change.
This too has implications for policy makers working with those in their golden years.
So what is the government doing to respond to these challenges and how will this impact on your industry.
This speech is an opportunity to wear two hats – one as Associate Minister of Senior Citizens and the other as the Leader of New Zealand First.
Given the nature of the supply and confidence agreement between New Zealand First and the government, there is a significant degree of overlap in these two roles as they relate to policy for those in their golden years.
The topic you have given today is "addressing the needs of senior citizens".
So who are we talking about.
In simple terms we are talking about 500,000 New Zealanders who are over 65 years of age.
They make up twelve percent of the total population.
But it would be false to treat 'seniors' as a homogenous group.
58% are married, with 27% single and 15% living in shared relationships.
There are nearly 25,000 more women than men among seniors.
Well over 4000 of them are caring for their grandchildren.
Not all of our seniors are reliant on superannuation. Around 7% receive a veterans pension, a special benefit or no superannuation at all.
Over 10% of our seniors remain in paid employment and they make up the overwhelming number of those in our voluntary sector.
Geographically, they are spread right across the entire country.
While Auckland is the most populated centre for seniors, this demographic is spread very differently from the general population, with regions such as the Bay of Plenty, Canterbury, the Kapiti Coast and the south of the South Island all containing disproportionately high numbers of seniors,
They have come from a variety of different backgrounds.
One thing though is certain in relation to those we affectionately label seniors as alluded to previously.
This group is getting bigger and they are not going anywhere fast.
So how do we address their needs?
The first thing we need to establish is that meeting the needs of seniors is not the responsibility of any one group.
The government certainly has a role to play in addressing the needs of seniors.
But so do seniors themselves, the wider community – including family groups – and also the corporate sector, particularly groups such as yourselves which provide services for this community.
The point here is that we in a collective sense have a role to play in ensuring that our senior citizens are indeed able to live in a way which befits their golden age.
But today's focus is on what the government is doing to fulfil its role.
It is worth making the point here, wearing a New Zealand First leader's hat, that as a party we have always taken the plight of our seniors seriously.
We have for some time believed that we can do much more to alleviate many of the circumstances seniors find themselves in.
This is what made the outcome of our supply and confidence agreement with the government so important.
It is true that we did not achieve all we wanted, but we were able to secure significant gains.
And it is important to note that these policy successes for New Zealand First are now in effect government policy priorities.
With New Zealand superannuation the primary source of income – and therefore the primary factor in determining the standard of living for seniors – we wanted to see an increase in the base rate of payment.
While there are supplementary payments available for those who face higher than usual costs for accommodation or as a result of a medical condition, disability or some other special need, it is the base rate of New Zealand superannuation which dictates the basic living standards of the vast majority of our seniors.
We knew from those within the seniors community that even a modest increase in super – as small as 5 to $10 a week – actually makes a significant difference to the living standards of those on a fixed income.
We were able to achieve this through supply and confidence which lifted the base payment for married couples from 65% of the net average wage to 66% of the net average wage.
I am pleased to announce today that from 1 April the rate of New Zealand superannuation and the Veterans' Pension will increase by $12.44 from $393.56 to $406 a week.
This will see the New Zealand superannuation rate for married couples set at 66.12 of the net average wage – meeting the requirements of the supply and confidence agreement.
The rate of superannuation for single persons living in shared accommodation will increase to $243.60 a week and the rate for single person living alone to $263.90.
As I noted before – these are not huge increases – but for seniors they are meaningful.
Another facet of the supply and confidence agreement was the proposal to develop a dedicated seniors card which was able to be used to identify the holders eligibility for all public sector entitlements and negotiated commercial discounts.
New Zealand First proposed this last year when we launched our Golden Age Card as the cornerstone of our seniors' policy.
It was important that the government recognised the inherent value for our seniors in having a dedicated card which incorporates both the entitlements which government provides with many of the discounts available from commercial entities.
Work is already well under way on developing both the policy and the practical considerations for implementing the card.
At this stage we expect it to be in place by mid 2007.
When fully implemented it will create a type of one stop shop for the many different public sector entitlements – avoiding much of the unnecessary duplication which currently exists.
There are other advantages to the card as it is currently being developed.
It will have the capacity for additional benefits to be added as they are negotiated in the future.
It will also provide a much more definitive link between seniors and the information they require to get the maximum benefit from the services already in place.
It is disappointing that in our day and age that a lack of awareness or access to information can be a barrier to seniors receiving their full range of entitlements. We hope that this card will go some way to remedying this.
But the card is more than simply the sum of all the benefits it will provide.
It is a symbol to our seniors that we value them, that we recognise their contribution to our country and that we will do our best to ensure that they can live with dignity in their golden years.
New Zealand First also secured several other policy concessions for seniors in the supply and confidence agreement.
The government has agreed to look at ways to improve the options for those who may be eligible for foreign pensions as well as New Zealand superannuation.
This is a significant issue for thousands of our seniors and the government already has significant work underway to address this issue.
There is also agreement to investigate the best way to recognise veterans of active overseas service. Again the government is making progress in this regard.
The 2006 budget will also see several issues within the eldercare sector addressed as a matter of priority.
In addition to those things contained in the supply and confidence agreement, the introduction of a greatly enhanced rates rebates system from 1 July will make a tangible difference for many seniors.
With the maximum amount increased from $200 to $500 and the basic income threshold lifted from $7,400 to $20,000 a year the net of eligibility will be significantly wider.
These are all significant developments for seniors.
Indeed one might conclude that there has never been a better time in our recent history to be a senior.
But while these changes represent real and tangible progress there remains a significant gap between what the government can and will provide and the expectations of those who are now reaching their golden years.
We began this afternoon noting the attitudinal difference between those currently retired and those about to enter that stage of their lives.
This is actually an important consideration for groups such as yourselves.
Those who are currently retired spent their working lives in an era where by and large there was an accepted social contract between themselves and the government that they would be looked after by the government in their retirement.
Their expectations are generally modest, but most importantly, a large number of them had not put any real additional funding away for their retirement.
For this group New Zealand's provision of a universally available taxpayer funded superannuation scheme, that is adjusted according to the average wage and CPI, and does not have an extensive residency requirement is critical.
For this generation to truly have a golden age then the government will carry much of the cost.
Those about to retire have far greater expectations of their retirement and the proportion of this generation which have made their own personal provisions is far greater.
The obligation for individuals to take responsibility for their own level of retirement income beyond New Zealand superannuation really increases as the age group gets younger.
The government has begun the process of setting aside additional funding, colloquially called the 'Cullen fund', to offset the future cost of delivering New Zealand superannuation.
But this will only ever deliver on the base rate of New Zealand superannuation.
Extra income in retirement to meet greater expectations will have to come from retirement savings.
The government has taken the lead on this front by establishing the Kiwi saver scheme – a voluntary work-based scheme aimed at building a savings base which is woefully lacking.
To wear a New Zealand First Leader's hat one would add that we as a party believe that compulsory superannuation savings is in fact the only lasting solution to resolving the concurrent problems of our poor savings record, our lack of domestic capital investment and meeting the costs of retirement income.
However, the key is to find the appropriate mechanisms to increase our savings base and to educate those moving toward retirement of the need to prepare now to ensure their income can match their expectations.
One final issue to address today is the matter of home equity release schemes.
These schemes have been marketed as means for those who are retired to free up some of their home equity to enhance their standard of living. For some it is about meeting a large unexpected cost, while for others it is about supplementing their income.
There are a variety of schemes available, but most are based on the principle that the capital advances, and the interest on them, are accumulated and do not have to be repaid until the home owner dies.
However, what is clear from both the industry here and overseas experience, is that the cost and benefits of such schemes are not always fully understood or appreciated.
With retirement now increasingly a 20 year plus part of our likely lifespan, the implications of such schemes, particularly the interest bearing component over that period of time, needs to be fully explored.
The government is working to establish standards for such schemes through the development of a code of practice.
Overseas experience and our own growing body of New Zealanders utilising these schemes highlights mixed experiences from these schemes.
The government is working to ensure that the interests of our seniors are protected as more and more New Zealanders utilise these schemes.
In conclusion, there is a commitment to improve the lot of seniors in New Zealand.
It was William Shakespeare who said, "The golden age is before us, not behind us".
It should remain our ambition to make this so.