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Hospitals to pay for super

Bill English's latest take on the super debate.

Sunday, June 10th 2001, 9:10PM

by Bill English

The New Zealand Superannuation Bill has cleared its next hurdle and will soon be reported back to Parliament. In select committee, National members moved to prevent the Government shutting down debate and reporting the Bill back to Parliament. That move was blocked.

The timing of the deliberations meant that National members did not have the opportunity to take debatable issues to the National caucus. The Government has created for itself a procedural shambles to match the political shambles now afflicting the bill.

The Government has rushed the bill through public scrutiny, and now relies on Winston Peters' say-so to get it through Parliament. This is hardly a recipe for the 100 years of political stability the legislation needs for the super fund to work.

National went into consideration of this proposal open to being persuaded of its merits. However the Government hasn't made any effort to persuade its own supporters, let alone other parties. That is not the way to broker enduring cross-party support for a proposal which can only succeed if it has strong political and public support.

The Greens

The Greens are to be admired for not allowing themselves to be pushed into agreeing to the fund just because Labour think it's good politics for the next election. That stands in sharp contrast to the Alliance, which agreed to support Finance Minister Michael Cullen's proposal in a trade-off to get funding for their so-called People's Bank.

They have resisted political expediency. Instead they appear to have been working hard to understand the issues involved with the huge fiscal commitment the super fund would involve. Labour's plan runs for 100 years and it's the biggest single commitment of taxpayers' money any political party will make in the next few decades.

The Greens have obviously found the weight of evidence to be against the fund and their decision will be a wake-up call to churches, unions and community groups who have so far had nothing to say about the fund.

National shares a lot of the concerns the Greens have expressed about the fund. This is especially true for Green co-leader Rod Donald's comment that "the requirement to pre-fund super would be a straight-jacket on all future Government spending decisions (which) would suck dry future budgets (and) could leave other portfolios like health and education even worse off."

There has been no public debate over whether this fund, or a faster growing economy is the better guarantee of the security of future pensions.

The Budget

As we predicted, having to provide for the superfund in this year's Budget meant policy constraints in other areas. Hospitals saw their lowest level of increased funding since 1992 which will inevitably lead to cuts in services. Tertiary institutions are being left with the prospect of raising fees or cutting courses.

But the biggest shock in the Budget was that Dr Cullen doesn't have the cash to do everything he wants to do. Budget tables show a profile of rising debt over the next four years. This is a marked change in trend from the last nine years in which debt has been falling. The Budget shows gross debt rising $4.8 billion and net debt rising $2.9 billion by 2005.

Dr Cullen simply doesn't have enough cash to spend what he wants to spend nor maintain and improve the Crown's existing asset base while at the same time investing in the superfund.

In the period to 2005, the Crown needs to invest $19.3 billion, which includes $6.1 billion for the superfund. But over that period Dr Cullen has only $11.7 billion cash available from surpluses. He therefore needs to find another $7.6 billion.

His Government raised taxes with the promise to New Zealander they would get better services. Instead it's underfunding hospitals and starving universities of funding. At the same time the Government is short of cash for its ambitious superfund and debt is rising.

Increasing debt was not part of Dr Cullen's plan as recently as last Christmas. His December Economic and Fiscal Update actually forecast declining debt, but in a matter of months the full cost of the Government's plans are becoming apparent.

Bill English is the National Party's deputy leader and finance spokesperson.

Bill English is the deputy leader of National and the party's spokesman on finance and superannuation.

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