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Carter Speech To NZ AgedCare '99 Conference

Hon David Carter
Minister of Senior Citizens
The second annual New Zealand AgedCare '99 Conference
Thursday 26 August 1999

Good morning ladies and gentlemen and fellow speakers.

Welcome to Wellington.

I'm pleased to be with you today and to have the pleasure of opening your conference.

I understand the organisers of this conference, the National Health Summit are recognised as being one of the leading providers of information for those working in the healthcare field.

It is vital that you keep yourselves up to date with what is happening in your industry.

This conference is a key opportunity for you to become familiar with the most current health solutions, research and strategies being employed by those working with the older population.

I commend you for your interest and your participation in this conference.

You have asked me to speak today on how Government is responding to the needs of our ageing population.

It is a crucial question and one I have become very familiar with over the last year as Minister for Senior Citizens.

I will cover the topic in three parts.

First of all it's important we address the health needs of our ageing population and this is the area you are obviously most familiar with.

I don't intend to tell you how to do your jobs, but I will give you a few pointers on the challenges Government faces in addressing this situation.

Then I will cover the question of how Government is preparing society to deal with the burgeoning older population.

New Zealanders are gradually wakening up to the realisation our society is greying overnight.

We need to prepare ourselves for the social and demographic changes this will precipitate.

Finally I will cover the contentious issue of superannuation.

When we talk about our ageing population it is this issue that most regularly rears its head.

The retirement income or superannuation issue has dominated public debate, and this is unfortunate, because in considering our ageing population we need to look much, much wider than this single issue.

Unlike our opposition, this Government intends to provide our older population with a real and sustainable solution to the superannuation question.

The Super 2000 Taskforce we have set up is committed to reporting back to Government next year with considered options.

Firstly Health.

Our ageing population is providing the health sector with significant challenges, but its ramifications are still not totally clear.

It's fair to say opinions remain divided on the extent to which an ageing population will place additional demands on health services.

The major issue is the perceived high proportion of health expenditure that occurs in the last two years of a person's life.

New Zealand is experiencing a significant population bulge in the older old group.

For example our over-85 population is increasing at the rate of nearly 5% a year.

However, New Zealand has yet to experience a clearly identifiable increase in health expenditure attributable to the greater numbers of older New Zealanders.

It could well be that changes in health patterns involving older people are hidden by factors such as better management of medical conditions associated with older people, such as strokes.

Improved pharmaceuticals and lower cost surgical interventions are also probably having an impact on the health dollar.

The use of acute public hospital beds for long term care has also decreased, so it is difficult to assess the actual health dollar being spent on the older person.

What is clear is that further research and analysis is needed to determine the implications of the ageing population for health service structures.

Complementing that information is the need for a clear policy focus on the health needs of older people.

We want to ensure that our health policies and resource allocations for older people are appropriately co-ordinated.

One of the initiatives the Government has launched to address this is a research project tied into International Year of Older Persons.

We have commissioned research which focuses on how older people live independently in the community, and looks at the services which help them maintain their independence.

The researchers are due to report back in October, and we're hoping for findings which will help us develop more co-ordinated policy in this area.

When we are talking about the health needs of older people, we are also talking about care in the home.

The bringing together of responsibility for long-term care and support of older people within the health services, in 1994, has enabled the health sector to set consistent policies and utilise resources effectively.

What has worked is policies and structures which enable resources to be moved between residential care and support in the home.

Government has also worked hard to ensure the user contribution regimes are consistent in the incentives they offer between home support and residential care.

The controls we have placed on the admission process so that care and support services are targeted and based on need, have also meant the services we fund are getting to those people who really need them.

It is still uncertain what effect the increasing incidence of dementia and related conditions will have on future disability services and costs.

What might be achieved through pharmaceuticals still to be developed, and what might be required by way of expanded specialist residential and home support services, is not yet clear.

(Inter-Generational Harmony)

I'd like to turn now to the topic of inter-generational harmony.

As New Zealand's population ages, the proportions of our population which fall into different age groups, are changing radically.

With these changes, the potential for disharmony between generations could be expected to increase.

However this does not have to occur.

Government has recognised that ways need to be found now to bridge generations and foster harmony among age groups.

Our support of International Year of Older Persons this year has been pivotal to this.

The funding support we have given to community celebrations of the year, and our own public recognition of the United Nations Year has carried a very important message.

Older people are important, they are valued and they must be included in the life and spirit of our communities.

The recent launch of our LinkAge guidelines, a programme promoting inter-generational activity in the school environment, was a key step towards intergenerational harmony.

The aim of the guidelines is to enable older people to be engaged in a variety of capacities in schools, or in education related activities, working with and alongside children and young people.

The benefits of such interactions go both ways - older people are being offered a chance to interact, to be valued and respected by young people, and our children and young people have an opportunity to mingle with and learn from their elders.

We hope LinkAge will spur the education sector to involve their local elders and encourage further inter-generational activity within communities and families.

Our older people have much to offer our young, and we all benefit if the different generations in New Zealand interact regularly.

The sort of relationships which are developed as a result of this involvement stand to serve New Zealand well in the future.

(Retirement Income)

Finally today I'd like to discuss the issue of superannuation.

Retirement income is important for three main reasons:

 It represents a significant proportion of our spending. Government expects to spend over $5 billion on New Zealand Superannuation in 1999/2000, which is nearly 14% of expected government expenditure;

 The ratio of the numbers of people over the age of 65, relative to the number of people in the workforce, is expected to drop from the present proportion of 1:4 to 1:2 in the middle of next century; and

 The issue of establishing a sustainable retirement income policy for the longer term remains unresolved.

Compared with most overseas countries, New Zealand’s retirement income policy has undergone a period of rather prolonged turbulence since the early 1970s.

In the UK the structures for the longer term were overhauled in the late 1970s;

In Australia compulsory employment based superannuation was introduced in the 1980s.

In many respects, the problems New Zealand faces in its retirement income strategy are ones arising from differing political perspectives rather than ones of design or technical parameters.

In recent years a major focus of Government effort has been towards depoliticising the retirement income issue.

This Government has spent much of its term seeking to build a constituency for agreed change.

The demise of the multi-party Accord on Retirement Income policies has not assisted these efforts.

Our primary focus now with the recently established Superannuation 2000 Task Force is to promote consensus on the issue.

The critical issue is that New Zealand Superannuation, as it stands at present, is unsustainable in the longer term.

To do nothing has never been a serious option.

If nothing is done to offset the costs of New Zealand Superannuation, by the middle of next century the tax take to meet the costs of New Zealand Superannuation, other Government programmes and maintain a balanced budget will be of the order of 40% of the Gross Domestic Product.

This would significantly diminish the opportunities for economic growth.

Clearly as a society we have to make a decision on whether we want to be part of a high tax, insular, low growth economy or part of a low tax, outward looking, high growth economy.

I definitely know which one I favour.

There is a clear difference of perception of retirement income issues between different generations.

Recent surveys indicate that the majority of younger people do not expect New Zealand Superannuation to be available for them in its current form when they reach retirement age.

However many older people are sensitive to the discussion of retirement income issues, especially the statistical projections on the proportion of older people in the population in the future.

It seems older people see such projections as devaluing of themselves as people.

This is certainly not Government's intention.

Planning for changes in the demographic structure of New Zealand cannot be avoided.

A robust public debate on an appropriate future retirement scheme is essential.

So is the need to provide for, and manage, future changes that are needed to ensure an affordable and sustainable retirement income scheme for the longer term.

While it would appear the message regarding the availability, in the longer term, of taxpayer funded New Zealand Superannuation is getting through, it is not yet demonstrated in significant changes in savings patterns.

The statutory role of the Retirement Commissioner in promoting private savings remains pivotal.

So is the need for Government to continue raising the issue of the future of New Zealand Superannuation.

It is unlikely that to move New Zealand Superannuation from its present position to a situation where it is sustainable cannot be achieved by any single policy change.

We have increased the age of eligibility for New Zealand Superannuation from 60 to 65 years over the period of 1992 to 2001.

However this change has to be placed in context.

By the year 2031 the life expectancy of people over the age of 65 is expected to have increased by about five years.

In other words, in 2031 people are likely to receive the pension for the same length of time from age 65, as they would have from age 60 in 1992, when the age of eligibility started to rise.

This is just one of a number of policy changes that have been implemented to initiate the move to long-term sustainability.

However we will need political consensus and "real will by all parties" before we make further progress.

That's where the Super 2000 Taskforce has a real role to play.

The Taskforce, an independent body of people, has yet to get backing from all political parties, yet they are the best chance we have of finding a sustainable retirement income solution.

For the first half of this year, the Taskforce has commissioned research and has talked with experts and sector leaders to establish an information base to work from.

From July this year they began a public information campaign to inform New Zealanders about the challenges we face in meeting the needs of our ageing population.

Government will hear back from them in November 2000.

I can only leave you today with the hope that our opposition will come to their senses sooner rather than later, and join the Taskforce.

We can only make headway on the superannuation issue by working together.

This issue is bigger than any one of us.

Thank you for your time and I now officially declare your conference open.


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