Anderton explains his support for the NZ Super fund

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Deputy Prime Minister Jim Anderton explains why, as leader of the Alliance, he made a U-turn and supported the establishment on the NZ Superannuation Fund.

Wednesday, June 5th 2002, 5:25PM

Thank you for inviting me to speak with you today.

I want to start out by saying there are many things happening that New Zealanders can be very positive about.

For years I came along to Grey Power meetings, and listened to the concerns of senior New Zealanders about the direction of government and of this country.

Those concerns were expressed about superannuation, health, jobs and the sale of public assets to name just a few.

This government has changed direction in all of those areas.

Superannuation

It is a simple fact that New Zealand's population is ageing.

Now 12% of New Zealanders are aged 65 or over.

Within 50 years, that ratio will have risen to 25%.

Not only will the proportion of retired people to workers increase but, as life expectancies continue to grow, the average period spent in retirement will also increase.

The cost of providing New Zealand Superannuation will make a much bigger claim on the public purse in the future than it does now.

If superannuation is to be universally available at that rate, then there are only three ways to provide for it.

We can put something aside today, increase taxes over time to provide for the growing number of retired New Zealanders, or we can cut other services such as health, education and police.

I have always argued that we should run a pay as you go scheme - where the costs of superannuation today are funded from taxes today.

The super fund partially pre-funds some of the future costs of superannuation.

It maintains some pay-as-you-go element for the future, and allows us to continue to meet demands for other essential social services today.

Everyone who is against this fund will inevitably argue for cuts to superannuation in the future.

There are many arguments around that the money going into the super fund could be used for other purposes.

The National Party is apparently going to spend the money on cutting the highest rate of personal tax.

It is also going to spend the money again on buying a fleet of space age air force fighter jets.

It has also variously announced that it would spend the fund on building a road between Hamilton and Auckland, and on a lap-top computer for every school child, and fixing the health system.

National has been cynical in promising to spend the super fund in so many different ways.

But it highlights an important point.

There will always be pressure to cut superannuation unless it is locked up in a secure fund.

This will be a major issue for New Zealanders to consider when it comes to voting at this year’s election: Which parties will pledge not to dismantle the fund and splurge the future retirement funds of New Zealanders?

It’s true that I had some reservations about the Labour party’s superannuation fund proposal in the form it existed before the election.

For example, the proposal then was to fund the super contributions out of the first seven cents in the dollar of personal taxation.

I believe that superannuation should be funded from the full range of government revenue, including GST, company tax, and court fines.

I believe the secure superannuation scheme we have developed is a very good one.

It takes a little something of the best from all proposals:

• It locks into law the base rate of superannuation: sixty-five per cent of average ordinary time earnings for a married retired couple.
• It pre-funds a proportion of future costs, on a fair basis;
• It continues a significant pay-as-you-go component, so that no generation has to pay twice for superannuation;
• It maintains a voluntary second-tier system. Eg private superannuation and savings schemes ie universal super)

Overall, the superannuation policy this Government has put in place fulfils a long-standing commitment to a publicly funded universal superannuation scheme.

I want to turn to some of the other achievements of this Government.

This is an extract from a speech deputy Prime Minister Jim Anderton made to a Grey Power meeting in Waitakere.

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