The Dominion Post (or whoever runs it these days) is pissed off about the tax cuts. And that’s all.

Also: The Dominion Post’s political coverage is inadequate. Perhaps if they stopped Bloggink (yes, Bloggink) and concentrated on the job of providing good analysis. Does anyone take their Press Hackery team seriously any more? I gave up reading them for serious political journalism about before Christmas. I except Jane Clifton, of course.

It is a nice idea to try to beat the interest rate, but it is a gamble responsible government should not take.

Oh dear, David that is 5.99% per annum, government debt is 5.99% over the whole period of the bond. (12:42)

I really can’t believe you wrote this!

One learns in Finance 101 that the coupon rate of a bond is expressed as an annual interest rate. Jack5 (at 3:22 pm) set out the correct position, and your glib response was rather disappointing.

If you won’t take any notice of DPF, Jack5 or me, then perhaps Wikipedia will set you right:

The coupon or coupon rate of a bond is the amount of interest paid per year expressed as a percentage of the face value of the bond. It is the interest rate that a bond issuer will pay to a bondholder.
…
For example if you hold $10,000 nominal of a bond described as a 4.5% loan stock, you will receive $450 in interest each year (probably in two installments of $225 each).

Let me rephrase your 12:33 pm comment:

Sonic needs to take a course in economics 101 (12:33 pm)

“and so far all of you are missing the tax returned on the fund which makes it a much better investment than would otherwise be the case.”

This is a totally lame comment from a former government Minister and lack complete common sense. I have had property investment companies, ie Blue Chip clones, encouraging me to borrow against the equity in my own home to put a 100% borrowings into some property investment scheme. The big selling point is the tax rebate. When I point out that I will only get 39% of the money back that I have to find from my own back pocket, they start feeling a little silly. The capital gains they were promising on their apartments has fallen flat now that the bubble has burst.

The reality is that for the government to invest in the superanuation fund, it has to first borrow the money overseas. The borrowing costs in that respect are higher and are prone to currency fluctuations. It could Issue more bonds, but they would have to offer higher interest rates to attract foreign capital. At a lending rate of 6 percent, the fund would have to see a return of greater than 6 percent before there would be any extra tax (Using FDR rules). A bad year would see a net interest loss to the government. Realistically, it would be difficult to sustain a return above inflation once interest costs are catered for. As markets are volatile, a few bad years (maybe such as now) would see debts outstripping assests. The onus will come down to our children to have to pay them off. Personally I am mildly bitter at the debts that baby boomers left my generation. (It is bad enough to be responsible for the retirement of 3 generations, my grandparents, my parents and mine) I would not want to do the same to my children. For the sake of having to increase 3% the value of future super payments from the annual tax take, I certainly do not want to gamble the future of New Zealand on the international debt markets.

The better way to invest in superannuation is to increase productivity, growth and therefore increase the tax base. This would serve to balance government books, provide a surplus for future superannuation payments or even tax cuts, further increasing economic activity.

By the way, I think Sonic is actually a Tori. He just likes to play the steriotypical dumb and clueless pinko Lefty devoid of any financial nous. Much Like Trever (I am yet to apologise to Melissa) Mallard.

You may not believe this from reading the Green pages and all the fear stories about health but every year the life expectancy of the average male in NZ increases by three months. That means the average male life expectancy increases by one year every four years.
The female rate of increase is slightly lower but the males are in catch up mode.
When universal super was first introduced (about 1907?) only 15% of adult males lived long enough to collect it.
I am now 68 and am working as hard as ever and my earning power remains high although I am struggling somewhat to pay the taxes calculated on last years’ incomes.
I cringe when I am asked if I have some golden oldie card or find I can get perks paid for by the struggling young.
I have not retired because I have known for about 50 years that retirement is the most deadly disease or activity you can catch.
Concert conductors are the longest lived people because they get reasonable exercise but mainly they always have a concert booked for the next year – so they can’t die can they? That is why gardening is so good for us older folk – we are always planning for next year’s bounty.

So some time ago we should have started increasing the retirement age by one year every four years, and we should definitely start now.
We are not only living longer but also we are living more active lives. A person retiring today at 65 probably faces another twenty to twenty five years of active life. This makes the other issues of super pale into insignificance.
We cannot expect the young to support a huge cohort of people living to be a hundred.

Face reality. No one aged fifty today should be expecting to get tax payer funded pensions before 70. And soon that will be 75.

Interesting comment. I think dismissing the invisible hand of the market like that makes you a radical. But then again, lefties still believe in the magical power of government to do things better than the individual, and to make everything ok.

“George: “Well, if not a gazillion dollars, then how much? Exactly $2 billion? $250 million like English is doing? $3 billion? $1.5 billion?” How about exactly the amount of contributions required by the governing legislation, which both National and Labour support.”

Thr problem is that the governing legislation doesn’t specify an exact amount for times of economic deficit and in fact provides for suspension when there is a deficit.

But I assume you mean $2 billion which has been the practice during times of surplus.

But what’s so magical about that amount? It would have led to the Fund paying 12% of the cost of Super at the peak. Why not a bit more to raise the 12% figure, or a bit less to make it a bit lower.

Your position can’t be defended.

Poor Jack, it’s not easy being him you know.

Unaha, you are the one suggesting we have to cut superannuation not me, I’d be interested in you backing that up rather than wandering “jack like” through some fantasy debate of your own.

Catatonic shows yet again that it is pointless to try to debate any topic with him. He wouldn’t last in any debating team outside one made up of patients in a psychiatric hospital.

Catatonic, is it true that you’re a Glaswegian? If so what shame and stain you bring to the reputation of Scotland, home of the great Adam Smith. Are you one of the stirring stewards who helped wreck the mighty heavy industry on the Clyde?

Whoops, I’m breaking my own rule. The way to stop sabotage by trolls like Catatonic is to ignore them.

Auld Lang Syne McTrrrroll!

So the “economic reality” is that this country is too poor to to provide for it’s old people. Sorry I’m not buying that mate.

You are on a thread arguing about how to best adopt a strategy to meet a projected shortfall in superannuation funding, but you are “not buying that” such a shortfall is going to take place. Interesting…

Perhaps you should find a forum where no-one calls on your your economic gibberish Jack.

You really have all the political judgement of a small pebble unaha.

When politics clash with economic reality it seldom results in a victory for “political judgement”.