Politicians must take Treasury’s long term position report seriously for young New Zealanders

ACT alone is calling for a debate over the sustainability of New Zealand Superannuation, says Leader David Seymour as Treasury releases its fourth long term fiscal update.

The release comes a month after Retirement Commissioner Diane Maxwell said that our current settings are unsustainable and, sadly enough, every political party except ACT ran for the hills.

“Anybody under 30 knows that they will not receive Super on current settings, and that policy adjustments are inevitable. The issue is that we’re not allowed to talk about it, with all political parties in denial,” says Mr Seymour.

“They intuitively know what the Treasury says in its report, that ‘governments have many options at their disposal to address these challenges, but the challenge gets harder the longer we delay.’

“Treasury couldn’t be clearer – we’re going through an unprecedented demographic shift towards an older population, and this will have enormous effects on the affordability of Superannuation.

“Right now, 15% of the population is over 65. By 2060, when current university students are retiring, 27% will be over 65. This will bring the cost of Superannuation from 4.8% of GDP to 7.9%. And today’s surplus would, on current policy settings, become a 16% deficit.

“All up, this means a 27% increase in government expenses, requiring a 27% increase in taxation rates. This burden will be shouldered by today’s young people. Either that, or at some point a future government will pull out the Superannuation rug, making cuts without giving New Zealanders time to prepare.

“John Key made an ill-fated promise in 2008 not to adjust superannuation. Labour used to have a policy to raise the age but scrapped it after their 2014 election loss. That’s left ACT with the job of keeping this issue into the spotlight.

“Whether it’s transitioning to a higher eligibility age, pegging the payment rates to inflation instead of average wages, means testing, or all of these measures, we need to have the discussion today, no matter how skittish John Key and Andrew Little may feel.”

ENDS

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