Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Text is incorporated into the Bound Volume 
Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Sitting date: 26 June 2012. Volume:681;Page:3359. Text is incorporated into the Bound Volume.] 
Tuesday 26 June 2012 
( 
continued on Wednesday 27 June 2012 
) 
Debate on Crown Entities Public Organisations and State Enterprises 
In Committee 
Debate resumed. 
Retirement Commissioner ( 
continued 
)  
DARIEN FENTON (Labour) 
: 
 As I was saying last night New Zealand superannuation is important for future generations. We have to act now to ensure that we have universal superannuation for our children and our children’s children. The thing that guides Labour’s debate on this is fairness and sustainability. First of all it must be sustainable so that we can say to our children and grandchildren that there will be a universal superannuation scheme in the future. Quite frankly many young people do not believe there will be. They simply do not believe that superannuation is going to be around when they are older and Labour does not think that is right. We think it is only fair that our kids enjoy the same opportunities that we have available to us. I hope that in the future every member in this House including John Key will be able to look their kids and their children’s children in the eye and say: “We did everything possible to make sure that the principle of universal superannuation was available for all of our kids in the future.” 
The other principle guiding the debate on this is fairness. We want to make sure that people in the future are able to access superannuation when they need to. One of the discussions that Labour has been having is about how you make sure if we have to raise the age manual workers and others who may need to access superannuation earlier actually are able to do that. We believe that by gradually lifting the age over a reasonable period of time— 
John Hayes 
: What to? 75? 
DARIEN FENTON 
: —we can protect and preserve New Zealand superannuation. Well that member would not have long to wait actually if it were 75. If we do not act it will become unaffordable. 
We are very very disappointed in the response from the Government. John Key as usual has wavered all over the place on this. In 2004 he was saying: “Well actually lifting the retirement age is a sensible thing to do. And if we lift it in 20 years’ time will that be a big deal?”. When we propose it now of course he says that there is no need to raise the age of entitlement for New Zealand superannuation. I think he has his head in the sand and I think the Government has its head in the sand. 
Everybody is saying that this superannuation scheme at age 65 is unsustainable. In just 4 years’ time we will be spending the same amount on New Zealand superannuation as we will on education. That is early childhood education primary education secondary education and tertiary education combined—$12.4 billion. You can understand why young people are saying that this is not fair. At the moment we have 5.6 people working to pay taxes to support each superannuitant. In 40 years’ time there will be only 2.4 people to support every superannuitant. The cost of New Zealand superannuation is going to double over the next 40 years as the baby boomers retire. Our life expectancy is increasing. 
This is a conversation we need to have. We are open to considering all good ideas from all parties that will create a fair and sustainable scheme into the future. If we do not tackle this tough issue now on our own terms it will be forced on us later. As I said I do not want to and I am sure John Key does not want to look his children and grandchildren in the eye and say that we did not do everything possible to ensure that they enjoy the same benefits that we will as we retire. In fact I was imagining last night John Key sitting in a rest home some time in the future probably being staffed by— 
Hon Member 
: In Hawaii. 
DARIEN FENTON 
: —in Hawaii—by poor Filipino migrants because the Government refuses to do anything about lifting the standards and the pay for aged-care workers and his grandchildren saying to him: “Grandad grandad why didn’t you do anything? We can’t get superannuation now. Why didn’t you do anything?”. I would be very interested to know what his answer will be. John Key has a responsibility to act on this and to act on it now. 
DAVID SHEARER (Leader of the Opposition) 
: 
 Well I can tell you what John Key has said. He said that he would resign before putting up the retirement age. Now that is a good idea. That is one good idea that the Government has come up with. 
Hon Nathan Guy 
: Did you make that up yourself David—that line? Did you? 
DAVID SHEARER 
: That is what your leader has been saying Mr Guy. That is what your leader has been saying. I think you should hold his feet to the fire my friend. 
The important point about this debate is that the Retirement Commissioner has actually come out and said that if you do not do something about superannuation you have simply got your head in the sand. Therefore this Government has got its head in the sand. 
The bottom line here is that when I go around and talk to young people—people in their 20s but certainly people in their 30s and 40s—they honestly do not believe that superannuation will be there when they get to the point of retirement. They think that the people who are around today will have pulled up that ladder and they will be having to fend for themselves. The statistics the maths and just about every reputable organisation has come out and said that if we do not do something about it soon that is exactly what will happen. There will be 2.4 people in work for every one superannuitant in 30 years’ time. Those people in work cannot possibly look after their own health and education and the superannuation for people who need superannuation. We need to do something about it now and that is exactly what the Retirement Commissioner has been talking about. 
It is about lifting the age but it is about doing it fairly. We need fairness in three areas: fairness so that we do not disadvantage our young people today and that we give them exactly the same opportunities that we enjoyed in the past fairness so that those people who cannot work to 67 because they are in manual jobs and are unable to work to 67 are treated fairly and fairness—and this is what I think is going to happen—around the ability of people to plan into the future. If you do not give people that ability what is going to happen is that they will have this foisted upon them because suddenly we will not be able to afford to continue as we are today. 
Darien Fenton mentioned the statistic about education. In 3 years’ time superannuation will exceed our entire education budget—our entire education budget—and it just gets worse and worse from there on in. The superannuation budget is going up like this and education will be staying flat. So this Government putting its head in the sand and John Key’s saying he would resign before putting up the retirement age is simply just closing off options and not being responsible about where New Zealand has to plan and where it has to go. 
What we have said that we will do is we will sit down with any party and talk about this issue right across the Parliament and right across New Zealand society because this is too big an issue to be politicking about. But I can tell you what we will be putting the pressure on this Government to actually realise what it is doing by ignoring the statistics and the time bomb that awaits us if we do not do something about this. We will sit down and talk about it but we are not going to take our eye off the ball in terms of making the responsible decisions—the responsible decisions—for New Zealand. 
This is an issue that affects us all. It affects those people who are about to go into retirement. It affects those people who are being born today—or my kids who are going to have to foot the bill for my retirement into the future. And I do not think it is fair. I do not think it is fair that they are going to have to foot the bill at the same time as pay for their education pay for their health— 
Maggie Barry 
: Save up. Buy some shares. 
DAVID SHEARER 
: You can argue and yell all you like on the other side but you know—sorry Mr Speaker—that party knows that it cannot ignore this issue. The IMF the OECD Treasury—just about every single reputable organisation around the world recognises this. We see Australia the UK the US and most of the OECD lifting their retirement ages to 67 because they know that it is the responsible thing to do and this Government should realise it as well. 
Hon DAVID PARKER (Labour) 
: 
 It is seldom that you see a Government so willing to treat people like fools—treat them as if they have got no idea and no common sense. During that speech from David Shearer when he was saying that we are going to have trouble meeting the future cost of superannuation if we do not raise the age of entitlement Maggie Barry interjected: “Buy some shares buy some shares.” “Buy some shares.” she said which was a reference to the State-owned enterprises share sales at the moment. This Government is just treating people like fools. It is out of touch. Imagine— 
Phil Twyford 
: Let them eat cake. 
Hon DAVID PARKER 
: Let them eat cake—that is right. “Let them eat cake.” Mr Twyford says. 
Hon Trevor Mallard 
: “Queen Margaret”—“Queen Margaret”. 
Hon DAVID PARKER 
: Ha ha! “Queen Margaret”. About 2 years ago the office of the Retirement Commissioner said that we needed to move on the age of eligibility for superannuation and the Labour Party looked at it. We took it seriously. Phil Goff encouraged us to take the hard decision that needed to be taken—not politically popular but the right decision for our country. It is really important to the people whom the Labour Party represents because our people—more than John Key—need to have the security of superannuation being available to them in the future. Our people by and large do not have much income in retirement other than their superannuation and for us maintaining the sustainability of superannuation is absolutely important. 
We have the Government this week again throwing pixie dust around trying to divert people from the real decisions that need to be taken by a responsible Government. This is the week that we have had the Government in trouble on asset sales. That legislation passed by one vote—with Peter Dunne’s vote—in the House. That is deeply unpopular in the country and it is no coincidence that the Government brings out targets for the Public Service. But they are not meaningful targets because they do not address the important issues. There is no target for addressing the age of eligibility for superannuation—no target at all. There are targets there that relate to reducing violent crime within a period of time and reducing welfare numbers within a period of time. There are no policies to back them up but the Government is very willing to promise a rainbow at the end of every street—fictions that it takes to the public—but produce no accountability for itself for the really important decisions that need to be taken like the age of eligibility for superannuation. 
 There is no principle lying behind the decision making of this Government as is evidenced by the fact that everyone except National members it seems knows that we need to do something on the age of eligibility for superannuation but they refuse to acknowledge that reality. They instead throw diversions. Other diversions have been thrown recently when they are in trouble. They have said: “We will have legislation for boat people.” It is already a crime to come into New Zealand that way and there are no boats on the way but they throw that in as a diversionary tactic. Then when it is in trouble on teachers and class sizes they throw another one. They say: “Look we will look at compulsory sterilisation for beneficiaries.” which is another attempt to divert the attention of the public from them not addressing the big issues. It is not working with the media. The media are seeing through this and I congratulate the media on doing that. 
National is not addressing these big decisions. As we have already heard not only does the cost of superannuation exceed the total spend on education within about 4 years but also it is about 20 times the unemployment benefit. So the Government produces a target for beneficiaries and yet it has got 20 times the cost or close to it in respect of superannuation. Superannuation very soon exceeds the cost of all benefits: unemployment benefit domestic purposes benefit invalids benefit and sickness benefit. 
Superannuation is not a benefit but it is a transfer payment and it is a cost that comes from taxes and the Government’s refusing to move on this just makes a nonsense of its pretence to be serious about controlling cost centres for the Government. So it cannot claim any moral authority when it comes to these other areas of expenditure because it is ignoring the bigger issue that relates to the rising cost of superannuation. We need to give proper notice. We need to have fair transitional arrangements for people who are worn out by age 65 because of manual work. That is the discussion we should be having not the discussion as to whether there is any need to move at all. The Retirement Commissioner is to be congratulated on her work. 
Hon RUTH DYSON (Labour—Port Hills) 
: 
 I want to join my colleagues who have spoken in this debate by congratulating the Retirement Commissioner on consistently raising the issue of New Zealand superannuation into the future. The question that I was hoping the Minister in the chair the Minister of Internal Affairs might answer was this: how can we look New Zealanders in the eye and say that when they reach the age of retirement they will have a secure income that gives them the opportunity to live in dignity in our community? How can we say that they will not have to downsize they will not have to live in a poor state of health they will not have to live with poor housing conditions and they will be able to live with security and dignity? The way to do that is to ensure now that we have a fair and sustainable New Zealand superannuation scheme. 
That is the big challenge for New Zealand. That is the challenge the Retirement Commissioner has consistently put on the table for this Parliament to address and what the National Government has done—and John Key in particular—is bury its head in the sand and say: “This is too hard. It might not be popular. We’re going to hope the issue just goes away.” In fact John Key went so far as to say that he would resign rather than face up to the issue. Like my colleague David Shearer said I think it is a jolly good suggestion. 
We want to ensure not just for our generation but for our children’s and grandchildren’s generations and their children and grandchildren that they have security and dignity in their retirement years. We know already that a lot of young New Zealanders just do not believe that there will be a superannuation scheme for them in the future. That is really unacceptable. Our young people particularly those who are on low incomes who are putting away their bit of money into KiwiSaver hoping to be able to buy their first house but who do not have a lot of discretionary spend—the people on lower incomes who work as hard as they possibly can and contribute so well to our society to their families and to our communities—deserve the dignity of a secure retirement income as well. It is not good enough in the civilised society that we espouse to have in New Zealand that only the rich people in our society only people who are on very high incomes will have security and dignity in retirement. 
The reason this issue is so important is that like every other country we will have a higher percentage of people who are drawing on superannuation and a lower percentage of the population who are of working age and paying taxes to fund that superannuation. So that is the issue that we need to address. We know from OECD reports that we are an outlier on this issue: 28 of 34 OECD countries are planning to increase the age of entitlement for superannuation. New Zealand is out on its own in not facing up to this being one of the options that we need to address. The IMF says that our superannuation spending will increase in net present terms by 66 percent of GDP. That is a huge increase. Where does the money come from to fund future superannuation needs? Mercer says that if we increase the age of eligibility for superannuation by 2 years that would make a difference of $100 billion over a 30-year period. That is a massive amount of money and if you do it— 
Report noted. 
The CHAIRPERSON (Lindsay Tisch) 
: The debate on the performance of the 2010-11 and current operations of Crown entities public organisations and State enterprises has concluded. I shall report this debate to the House. 
Report adopted.