English won't dress up as Superman

ANDREA VANCE
Last updated 12:17 18/05/2014

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OPINION: Bill English's rabbit out of the hat last week was free GP visits for pre-teens. But his Budget lacked measures to support those children in later life.

National has put the issue of retirement savings in the too-hard basket - to be expected in an election year. But any expert will tell you that when it comes to pensions, you can't make up for lost time.

A few days before the finance minister unveiled his Budget, Prime Minister John Key ruled out mean-testing the pension. He reasoned the current universal system is uncomplicated.

It came on the back of new figures that show tens of thousands of well-off pensioners are drawing up to half a billion dollars in superannuation each year. Key has previously said he would resign rather than raise the pension age.

"The ageing population presents risk to the medium-term fiscal position particularly to the extent that demographic forecasts may be too low or high," Treasury warns in the mountain of Budget documents issued on Thursday.

"An ageing population requires increased government expenditure, especially for health and superannuation spending."

Forecasts put the increase in New Zealand Superannuation costs at $500 million to 600m a year - gobbling up the equivalent of the complete increase in new spending the Government allocated itself. By 2018 it will cost $13.6b.

English acknowledged this, telling journalists and analysts on Thursday: "That [rising cost] comes on top of our Budget allowance. So it is a significant driver of budget expense." Tellingly, he added: "I think the budget we've set out today shows us that for the time being we can afford that."

For the time being. In other words, leaving the problem for a future Government. Breaking Key's pledge not to lift the pension age is a no-go for National in an election year.

Commentators have mused that UnitedFuture's Flexi Super (offering a choice of retirement between 60 and 65 with a correspondingly smaller state pension) would offer National an elegant out. But public consultation on Peter Dunne's flagship policy closed in October - with only silence since.

There's no need for Key and English to do too much to soothe the voting public - the latest Stuff.co.nz/Ipsos poll shows just over a quarter of respondents believe raising the age is important to them or their families.

Following in the wake of Australia (which is to lift eligibility to 70 by 2035), was never on the cards for this Budget. Nor was compulsory KiwiSaver contributions, a Labour policy.

The only nod to what some have called a looming pension crisis, was confirmation that contributions to the Cullen Super Fund will resume in 2020, once the Government reaches its target of reducing debt to 20 per cent of gross domestic product.

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The Government also didn't entertain KiwiSaver tax cuts. The Financial Services Council lobbied for a drop in the top rate from 28 per cent to 15 per cent and the lowest from 10.5 per cent to 4.3 per cent.

A tax cut is an expensive way to make voters feel good. This move would have limited political return - savers wouldn't necessarily notice the extra cash going into their KiwiSaver.

Whereas free prescriptions and GP visits, are as sweet as lollipop from the doctor.

- Sunday Star Times

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