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Will Key resignation pave way for NZ Super changes?

[UPDATED] Critics of the Government's current stance on New Zealand Superannuation are hoping that the Prime Minister's resignation paves the way for a change of heart in the Beehive.

Monday, December 5th 2016, 3:42PM

by Owen Poland

Susan St John

"Maybe now we have more of an opportunity for an open debate" says Associate Professor Susan St John, Director of the Economics of Ageing Programme in the Centre for Applied Research in Economics (CARE) at the University of Auckland.

St John says the Prime Minister's decision to take ageing future projections off the table was "pretty short sighted", not mention his rubbishing of the long term fiscal projections by Treasury. "It would to be hoped that in future National would start to see it a little more seriously" she says,

Later this week the Commission for Financial Capability will release recommendations for changes to KiwiSaver and St John believes there will be some high expectation of a positive response from the Government, though if Bill English becomes the new PM then it might just be "more of the same."

Meanwhile Retirement Commissioner Diane Maxwell is keeping her powder dry on the PM's shock resignation by issuing a one line statement which read; "I may have disagreed with John Key on NZ Super policy but I have an enormous amount of respect for him, his leadership, and his achievements during his time as PM."

As the founder of the recently-launched Simplicity KiwiSaver plan, Sam Stubbs, says he wouldn't expect any surprises from a change in leader given that the Government's policy on retirement "is pretty much locked and loaded."

Stubbs doesn't believe that any National politician has expressed a particularly divergent view to John Key, so it's difficult to know what if any changes they would make. Besides, as the last election showed, retirement policy isn't a vote winner "so I don't think it would be front and centre as much as I'd like it to be."

ASB chief economist Nick Tuffley says "the fiscal viability of current NZ Superannuation would potentially be more open to debate, as John Key has long said he would resign rather than change the current scheme."

Here is more from ASB

What does this mean for the economy?

For the remainder of the current parliamentary term (less than one year) the implications are quite minimal.  Finance Minister Bill English, for example, has played a key role in the settings of fiscal and economic policy.  He, and other senior ministers, will remain as senior leaders guiding policy decisions (with some speculation that Bill English could be the next PM).  The Government’s policy settings have been focussed on returning the Crown accounts to surplus, setting clear goals for government departments to achieve, and making policy changes incrementally.  There has been a focus on economic efficiently and on value for money out of government spending.

Longer term, the broad economic strategy of the National Party will depend on the guidance of the new leader, though under a Bill English government the differences might not amount to much given the influence he has been having.  The fiscal viability of current NZ Superannuation would potentially be more open to debate, as John Key has long said he would resign rather than change the current scheme.

There is now greater uncertainty over economic policy for the next parliamentary term, mainly through greater uncertainty over which parties will form government.  Whether the probability of a change in government is increased or reduced will depend on the incoming PM.  John Key’s popularity with the electorate, and his ability to ‘sell’ policies, has been high, though after 8 years at the top he is no longer a fresh face.

A National-led government would still be a largely known quantity, though its exact policies will still be influenced by its coalition partners.  A Labour/Green-led government’s policies have yet to be clearly defined this far out from the election but would tend to be more interventionist and more redistributive than the National-led government has been to date.

It is possible that business confidence will dip slightly in the short term, and the usual pre-election slowdown of business investment decisions may be larger than normal.

Tags: NZ Super retirement

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