Universality is essentially another of NZ's unfortunate Muldoonist leg

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Business Roundtable executive director Roger Kerr says making NZ Super a universal entitlement is no more than another "think big" idea.

Friday, November 5th 1999, 12:00AM

by Philip Macalister

Business Roundtable executive director says Roger Kerr says debate on superannuation over the past few years has clarified many issues. For instance the 1997 referendum clearly showed New Zealanders did not support a compulsory system, work by bodies such as the Investment Savings and Insurance Association illustrated economic growth was a key factor in determining the level of superannuation, and various reports by organisations such as the Periodic Review Group, the Todd Taskforce and the Accord showed that tax concessions for savings were undesirable.

The key outstanding issue to be resolved is the design of the safety net.

Kerr says historically superannuation has been provided to New Zealanders on a needs basis and it has traditionally been a benefit as opposed to an entitlement.

He says "universality is essentially another of New Zealand's unfortunate Muldoonist legacies – another think big scheme. Like the others, it should be abandoned."

The Roundtable's view is that NZ Super should be like all the other payments the Government makes to its citizens, that is they are given state assistance in times of need.

"A needs-based approach to a safety net emphasises individual responsibility," he says. "The role of the government is to help people who cannot help themselves and who cannot be supported in other ways."

Kerr says NZ Super as a benefit would, generally, be more equitable and efficient than an entitlement approach because people on low to modest incomes are not taxed to increase the incomes of retired millionaires.

He says when NZ Super is a universal entitlement the government taxes middle income earners, only to return the money to people in a similar category, with all the compliance, administration and deadweight costs associated with such 'churning'.

"A strong argument can be made that it is only the category of low income earners or those without resources who should be the object of public policy, on either efficiency or equity grounds, through targeted assistance," Kerr says.

For more on this see Roundtable Says Pension Should Be A Benefit in the Columns section.

Do you agree with Roger Kerr? To have your say on the subject visit the Discussion Forum.

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