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Peters Speech On Superannuation

Embargoed until 10am Thursday 14th October 1999.

Extracts from an address by Rt Hon Winston Peters to Howick/Pakuranga Greypower at Bucklands Beach Hall.


For the past fifteen years successive governments have tinkered with the standard of living of elderly New Zealanders.

Citizens who have made their contribution, and are entitled to live in some degree of financial security, now live in a state of insecurity, because they cannot trust the State to treat them fairly in their declining years.

Many people, we now describe as pensioners, worked and raised their families during a time when there was an established social contract between the State and the individual.

As we all know, a contract is a binding agreement between two sides and that when a contract is changed, both sides must agree.

Unfortunately, the State no longer honours its side of the contract.

Over the past fifteen years there has been an unrelenting erosion of the purchasing power of our senior citizens.

As successive governments reduced pensions, they claimed to be driven by economic necessity, but at no stage did they ever confront the problem of funding, or of creating a long term savings base for the future of all New Zealanders.

Instead, they relied on ineffectual political devices like the Superannuation Accord (which New Zealand First refused to sign), an equally ineffectual Superannuation Task Force, and the usual expensive public relations campaign.

At the same time, a vast number of private schemes sprang into existence but these still do not provide the guaranteed security that ALL New Zealanders clearly need and want for their old age.

As well, too many of these schemes do not meet the promises of their promoters, and are more designed to serve the interests of the promoters than the people.

To add to the problems of ordinary New Zealanders facing a bleak old age, the 1984 Labour government defied logic (as it did so often) and removed incentives for retirement savings.

This left New Zealand almost alone in the world as a country which did not encourage its people to save for their retirement.

During the time of the coalition government, a referendum was held on a compulsory retirement savings scheme.

New Zealanders were given a choice on a major issue and they voted it down.

Unfortunately, they did not vote the problem away.

Serious commentators, like the NZ Institute of Economic Research are now saying that it was too negative about the New Zealand First compulsory savings plan.

This is because the issue involves not only the retirement income of the elderly, but also the lack of savings in this country.

As a nation we are $102 billion in debt. Up from $16.2 billion in 1984 – and growing $33 for every New Zealander each week. We have an Imbalance of Payments crisis because we import more than we export. It is an intractable crisis for which there is only one answer.

Today we are totally dependent on foreign money for investment.

Last year New Zealanders on average, saved less than one per cent of their earnings.

In short, as a nation we have lived for too long on someone else’s money.

We are like a one income family with no savings, a plastic credit card over the limit and nothing left to hock off at the local pawn shop.

New Zealand First is releasing its superannuation policy today with a warning that our savings crisis can no longer be ignored.

We have just wasted a quarter of a century from the vision of Normal Kirk for New Zealanders to save in their own name, a vision which was unfortunately rejected in the 1975 election.

Our National Debt and our Imbalance of Payments will never be overcome until we face reality as other nations have - accept that national savings are critical to our future, economic development and the eventual freedom from dependence on foreign money.

We must confront this dual crisis now. Further delays will impose an impossible burden on future generations of taxpayers, and reduce many elderly people to a state of penury.

Our plan is for a compulsory, contributory, State guaranteed and State administered superannuation scheme.

We will create a dedicated fund starting at three per cent of income and progressively moving to eight per cent.

At the same time we will progressively reduce income tax by the same amount.

This fund will be established and administered by an independent statutory authority called the New Zealand Superannuation Authority.

The fund will be in the name of each contributor and it will therefore be free from political tampering.

There will be minimum collection and administrative costs – it will simply be done through the Inland Revenue Department, after we have reformed that department as well.

The Superannuation Authority will have a minimum bureaucracy – all it needs to do is to hire the financial expertise, invest the money and write the cheques.

Until New Zealand’s capital requirements are met and our dependence on foreign savings is overcome, this money will be invested solely in New Zealand to create more exports, more growth and more jobs.

We believe that the income from these savings will maintain pensions at the rate of seventy per cent of the average national wage, and provide dignity and comfort in retirement for our elderly.

There will be a smooth transition phase from a pay-as-we go scheme to an additional second-tier save-as-we-go scheme.

In the meantime, as we have already announced, pensions will move from the present sixty per cent of the average weekly wage to sixty seven and a half per cent.

Too many of our elderly people who are totally dependent on the pension, through no fault of their own, are having difficulty making ends meet.

They often have extra medical bills, higher power costs and other expenses.

We cannot and will not let them fall into a poverty trap set by the State, and we already have the legislation ready to move on this after the election.

In short, New Zealand First is committed to a Superannuation and Savings Scheme that is fair, sustainable, provides an adequate retirement income and provides New Zealand with a strong savings base.

We will draw a line in the sand over this plan in any coalition talks after the election.

It is time for New Zealanders to start the new millennium with a positive and optimistic outlook for their future.


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