Everything up for grabs in super plan come coalition talks
By Richard Harman (author)
The election campaign has begun, and National has kicked it off with a clever piece of politicking designed to force its opponents into a corner on national superannuation.
The Prime Minister is proposing that he introduce legislation next year to increase the age of entitlement for NZ Super by six months each year from July 2037 until it reaches 67 in July 2040.
He is also proposing to double the residency requirements for super so that applicants must have lived in New Zealand for 20 years, with five of those after the age of 50.
The changes will cover people who arrive in New Zealand after the legislation is passed.
However, the policy is at this stage nothing more than a proposal.
There is a good deal less to it than meets the eye. What was announced was election policy rather than a determined Government plan.
And Bill English concedes it could all be re-negotiated during any post-election government formation talks with potential coalition partners.
For a start, it must overcome three hurdles before it can actually come into law.
- English refused yesterday to rule out putting it on the table during coalition negotiations after the election. Since it is likely National will have to negotiate with NZ First who may oppose it, it will be touch and go whether it survives those talks.
- Even if it does manage to stay in play, it then has to go through Select Committee scrutiny and be voted on in the House. English was not willing yesterday to speculate on how that process might go.
- And he has promised that come 2030 the Government would undertake a full review of the policy's potential impact - particularly on manual workers.
English would not be drawn into speculating on how any coalition negotiations with NZ First might go and said there would be a lot of talk about bottom lines between now and the election.
“But the nature of those (government formation) negotiations is determined largely by the voters,” he said
“This is a fair and reasonable approach; it protects the retired, it protects those who are near retirement and it deals with the issue of how long people have paid taxes for in New Zealand before they are entitled to super.
“When I have listened to other parties those are areas of concern.
“I think this announcement achieves a path to change that should be broadly acceptable.”
And to a certain extent, NZ First's reaction vindicated that statement.
The party’s Leader Winston Peters yesterday did not directly oppose raising the age and simply said English could not be trusted on super.
Then he added: “The good news is of course that he is finally listening to New Zealand First’s call for a fairer residency qualification, albeit taking up to 20 years is five years short of what would be fair.”
The next issue is after the Government formation talks and into 2018 when English (assuming he is still PM) wants to introduce the legislation into Parliament.
He was asked whether voting on the Bill would be a confidence and supply matter.
This time he was more frank.
“I wouldn’t want to prejudge that when we don’t have an election result,” he said.
“That is another matter for negotiation.”
What that implies is that National could be willing to bargain the whole policy away in the Government formation talks.
The final hurdle is the review and consultation of the scheme before it is introduced.
“We would include in the legislation a review about 2030 on how it might impact on various groups,” he said.
“The one that comes most easily to mind are those who have worked in manual jobs all their life and working past 65 is a bit of stretch, it would be pretty hard on them.
“I think those things do need to be taken into account.”
One backbencher told POLITIK that he thought the announcement yesterday would kick off a debate on superannuation which might well embrace other aspects of the whole superannuation picture, including KiwiSaver.
Certainly English is putting his faith in the public getting behind the idea of the need for change and certainty.
“The greater certainty comes from the legitimacy of it having been tested in an election and an incoming Government being able to get the numbers together in a Parliament that the voters have put there knowing that this was one of the things that was going to be put in place.”
English will have some powerful weapons as he goes into this debate.
Background papers to Treasury's Long-Term Fiscal Projections from last November spell out the options facing the Government if it wants to maintain its goal of a net debt limit of 20% of GDP.
In that case, the Government could raise taxes, slow down health expenditure or make the changes proposed by English to super.
And English has also set the 20% net debt target as the trigger point to resume contributions to the Cullen fund.
But he is sure to point the finger at Labour and demand to know which of the options in the Treasury paper they would choose.
He was already hinting at that yesterday.
“We want to reduce the pressure to trade off other spending,” he said.
"When you get to 2040, there will be pressure on health spending, on education, on other entitlements and the economy and younger taxes have to support all those different needs."
Labour wasn't saying much in response other than to affirm that they would keep the eligibility age at 65 and Labour Leader Andrew Little instead highlighted the political nature of yesterday's announcement in his a statement last night.
"This is about giving the appearance of doing something when it's really nothing at all. It's totally political," he said.
"They have even pushed out legislating for this until next year, and it doesn't take effect until 2040."
What National party sources and MPs are saying is that this will start a long-overdue debate on super.
And they believe that National has the upper hand in that debate.
National's campaign chair and Minister of Finance Steven Joyce was alongside English for yesterday's launch, and it was notable that within minutes of the Beehive media conference an email went out to National Party members and supporters from the party President, Peter Goodfellow, endorsing the policy.
Initial reaction from backbenchers was positive with the belief that the policy played to what they argue are English’s strengths – economic management competence and a willingness to be frank and upfront about political challenges.
There was some nervousness yesterday about English's potential media performance after his sudden (and unexpected) announcement of the decision to "reset" super on "The Nation” at the weekend.
After he had made the announcement, he was trapped because Cabinet had not actually signed off the final policy. That happened only yesterday morning.
Because of that, he couldn't say any more, and he spent part of yesterday being lampooned on Twitter and in social media for that.
But it is clear that yesterday's announcement is going to be a big part of National's “brand” this election year.
“Team Key” with its selfies and rock and roll radio spots is gone.
In its place is “Team Bill” a much more prosaic narrative which will build heavily on what National Party sources say is the feedback they are already getting about English being a politician who is respected for his competence and integrity.