Superannuation Options
I was reading through a submission by Michael Little wood in the 2001 Super Fund legislation, and what struck me was that New Zealand has never really had a proper public debate on how we want our “tier 1″ public superannuation structured.
Some of the issues one can debate are:
- Eligibility Age (was also 65 in 1898 when life expectancy was 60)
- Residency Eligibility (how long someone should have lived here)
- Level (do you tie to CPI, median wage, average wage, GDP, )
- Different levels by age – should it be at one level at say age 65 and a higher level at say age 68 or 70
- Regional Variability – should the level vary based on where you live, to reflect living costs – as the Accommodation Supplement does
- Income Testing
- Asset Testing
- Pay as You Go or Fully Funded
- Level for singles as opposed to couples
- Hospital Rates
- Payments to overseas based people
But I don’t want to debate any of those options today. We’ll deal with them one at a time over the next few months. Just because the politicians are saying there will be no change, doesn’t mean we can’t have a debate.
The question for today, is what is the date at which any future changes should start to apply, or conversely for how long should we guarantee the current settings?
I believe it is very important not to make changes quickly. It is unfair on those who have already retired or are near retirement, who have made plans based on what the Government has said. This is also what provoked so much outrage in the 80s and 90s.
So this is not about what the current Government’s policy should be, as it has been made clear that is not going to change anyway. This is about when a future Government might want to make changes.
The cost of public superannuation as a % of GDP is projected to be the following by Treasury:
2010: 4.7%
2015: 4.8%
2020: 5.3%
2025: 5.9%
2030: 6.7%
2035: 7.3%
2040: 7.7%
2045: 7.8%
2050: 8.0%
I tend to think 2025 looks about right. If one started to change the age from 2025, that would mean those aged over 50 would still retire at 65, but under 50s would know it is likely to be older.
It is basically about balancing up minimising the impact of changes on those already retired or close to retirement, and the fiscal impact of any delays.
Up until what date do readers think the current scheme should be guaranteed to remain as it is? My pick is around 2025, but what do you think?
November 2nd, 2009 at 9:58 am
You shouldnt make any changes to those currently receiving, for better or worse (probably worse) current beneficiaries made their plans based on the rules. You should also allow decent time for those also “planning” for retirement (you know gifting their house to their kids so they can get rest home benefits). I forget how it was handled last time the age was raised from 60 to 65 other than it was a progressive increase (6 months every year IIRC) from a pre-announced future date.
If you announced today that from 1 January 2025 the age of “entitlement” (god I loathe that word) was to be raised by 6 months for each of the next 10 years (so to age 70 by 2035) I think it would be hard to argue that wasn’t fair, and fair notice (given today’s 49 year olds would simply be deferred for 6 months). But someone will.
Of course you shouldnt try any one shot fix without looking at the total package.
November 2nd, 2009 at 10:01 am
Might be a bit hard to consider the super fund without considering KiwiSaver. If KiwiSaver becomes popular and effective (and have bi-partisan political support) we could afford to slowly phase out the super fund. How we did this of course will raise equity issues in itself.
[DPF: They are inter-related, but the best way to approach the issue I believe, is to design your Tier 1 public policy first, and then your Tier 2 (workplace schemes) policy to complement it, rather than the other way around]
November 2nd, 2009 at 10:07 am
2025 would be about right for me, I will have retired by then. It’s difficult to not think of it in personal terms. But things will have to change.
There could be reasonable ways to bring the timing forward. I think it’s worth considering the phasing in of super, at 65 getting say say 75%, 80% at 66 etc through to 100% at 70. That gives you the option from 65 of s retiring and supplementing income off savings/Super/Kiwisaver, or working part time from 65 and phasing out of the workforce rather than going cold turkey.
November 2nd, 2009 at 10:07 am
If KiwiSaver becomes popular and effective (and have bi-partisan political support) we could afford to slowly phase out the super fund.
Could we afford not to?
November 2nd, 2009 at 10:19 am
It would be electoral suicide to do anything quickly and irresponsible to do nothing at all.
A clearly signalled and gradual raising of the age of eligibility would be prudent and 2025 would give those who wouldn’t get super until they’re older than 65 time to prepare.
However, that wouldn’t affect me, people younger than late 40s may have a different view.
November 2nd, 2009 at 10:23 am
KiwiGreg IMHO eligibility is more accurate than entitlement for all welfare.
I agree DPF the only serious debate over the years has revolved on the purchasing power for votes and little else.
One of the basic problems hangs on the eligibility versus need question and the stupid outcome where profliglacy and poor choices result in need that could have been avoided.
My father after managing to save money from wages during the great depression could not then accept that the person in the next room at the rest home with no residual funds of his own,got everything he got but it ALL came from the state while he provided for himself and Mum, all the costs of their care partly of course from their N S. Thankfully they both passed away before “his funds ran out” but I have often mused on the effects of the stress he endured as a legacy of life in the thirties. AND morons today talk about poverty, bah humbug.
November 2nd, 2009 at 10:26 am
First, I think Kiwisaver is a classic rort. Its designed to churn incentives back to the middle classes but which effects the payout to beneficiaries, superannuants and the lower paid who cant afford/dont qualify for it. At some stage the govt has to address this incentive that channels spare funds all one way.
Second, the promise that Key made to keep his hands off the super indicates to me that he already has other ideas.. ie, a “workaround”.. perhaps an infrastructure investment thats very safe, conservative interest and qualifies for a tax deduction on the basis its a part super investment. Perhaps even a rolling maul of such investments with flexible risk/reward.
The huge advantage such investments could have is they don’t have to return 8% or somesuch.. just that they reduce the call on super as 8% of GDP in 40 years time back down to 4-5%.
JC
November 2nd, 2009 at 10:27 am
The current projected increase from 4.7% to 8.0% (in 2050) of GDP doesn’t look particularly bad to me. I’m certain you could find at least a couple of percent of GDP in wasteful and inefficient government programs to cut and that would cover most of the increase, even with all other things being equal.
But add an extra 1 or 2% a year growth to GDP and we’d have such a large economy that we wouldn’t have any trouble at all paying superannuation with the current eligibility criteria. People should be given a choice… If you vote for a more efficient restructured economy then you’ll retire at 65. But if you vote for a KiwiRail/ACC/ETS economy, then you’ll retire at 70.
[DPF: You can't be more wrong. 3.3% of GDP is around $6.5 billion a year in today's terms. You won't fund that in efficiencies, without actually eliminating some spending programmes.
Increased GDP growth is important but merely saying "hey lets have GDP growth 2% higher" is easier than doing it. But that doesn't even solve the problem as the higher GDP is, the higher average income is, and the higher superannuation payments will be]
November 2nd, 2009 at 10:29 am
Oh, and do we have historic cost of public superannuation as a % of GDP figures, so that we can plot a trend?
November 2nd, 2009 at 10:39 am
davidp,
That projected increase from 4.7% to 8.0% (in 2050) of GDP is just the cost of Super. Add to that the cost of health care – which gets more costly as people age. Then allow for the fact that the working age population will shrink dramatically as a share of the total population. And they are the ones who pay most of the taxes that fund NZ super and healthcare.
More GDP growth would be nice. But I can’t see it solving much. Super payments are linked to average wages – as GDP rises, wages rise and so does super. Result: problem not solved. Arguably we might all be so rich that we don’t mind paying higher taxes but I cant see people swallowing that very easily.
November 2nd, 2009 at 10:43 am
Whichever way you slice it, X and Y will get the sharp end of the stick.
November 2nd, 2009 at 10:43 am
Treasury are a bunch of scaremongering gits. A Responsible Society looks after its elderly and cuts spending in other directions.
The only problem with superannuation in the future is the threat from petty self interest, which is akin to the problem America faces today with the 47million without healt insurance.
Then there is the red herring about the ‘rich’ getting super … don’t the harping fools realise that the ‘rich’ pay it back in tax … damm petty idiots.
[DPF: Wow a content free post. Where do you see all the money coming from when the ratio of retired:working age goes from 19% to almost 50%]
November 2nd, 2009 at 10:53 am
When Kiwisaver came out at was it 4%, and now just 2%?, I thought what a miserable con. I saved effectively 15% of my income, my employer matched my contributions, and now while it is very nice extra to Nat Super it is nothing particularly wonderful to write home about … so hence my feelings about 4% or 2%. Then there is the question of investing the the private sector which from my experience has been extremely sub standard. As I see it the only responsible system for retirement and health is for a compulsory Government scheme. Private enterprise is not to be trusted with important things such as retirement income and health.
[DPF: This thread is about when any changes should take effect, not about KiwiSaver and compulsory super options]
November 2nd, 2009 at 10:53 am
Treasury are a bunch of scaremongering gits. A Responsible Society looks after its elderly and cuts spending in other directions.
What scaremongering? Treasury are pointing out the future impact of current trends – a core part of thier job. As the average age of the population rises, so will the cost of pensions. It ain’t rocket science.
What ‘other directions’ do you propose making the cuts in?
Health? That isn’t going to fly, with an aging population.
Education? Taking from the young to give to the old doesn’t sound all that fair to me.
If you don’t like what Treasury are saying, how about suggesting some alternatives.
November 2nd, 2009 at 10:57 am
2035
so that 40 yr olds have time to make adjustments.
One of the problem with all the schemes Kiwisaver etc is that the pollies fart around with it.
We need certainty and one that is comprehensive and covers everyone or allow them to opt out.
November 2nd, 2009 at 10:58 am
s.russell>Arguably we might all be so rich that we don’t mind paying higher taxes but I cant see people swallowing that very easily.
That is exactly what I’m arguing. I suspect people in 1975 worried that by 2009 they’d have a completely unaffordable superannuation scheme costing 4.9% of GDP to fund. Now it is no big deal. I suspect the same will be true in 2050… people will wonder what we ever worried about. If we could boost GDP growth to, say, 5% annually then by 2050 our economy would be about 5 times its current size, in which case we’d have so much money we could afford all sorts of stuff that we can’t even imagine now.
The ratio of workers to pensioners has been reducing for a long time. IIRC, in 1900 it was 10:1 or something close. We’ve reduced that to 3:1 or 4:1 (or whatever it is currently) without any great hardship while, at the same time, providing retired people with a much better standard of living than they had in 1900. So why do we think that it is going to be any harder going from 3:1 to 2:1 over the next 50 years?
The key is growth. If we have robust growth, then there is no problem. If we don’t, we’re stuffed. Which is why every time a government or opposition proposes an anti-growth policy (such as an ETS), then people need to be told that the result will be a miserable and late retirement.
November 2nd, 2009 at 11:02 am
The pollies own pension funds should reflect the rest of the country instead of being gold plated.
Maybe they would have a better attitude towards sorting it for us.
Maybe the answer is that we should pay them a massive amount in $ (as contractors, no salary, no allowances) for a limited time (limited terms).
This would get rid of career pollies and make them have to live real lives before and after. say limit them to 2 or 3 terms max.
Until we do something like this I don’t know that things are going to change as they Lord it over us, we are the servants not them.
So they run everything for them and their parties not us.
We need forward growth.
November 2nd, 2009 at 11:03 am
How about baby boomers stop fucking over the younger generations and do in 2015.
Sort it out
November 2nd, 2009 at 11:13 am
Bobux why do so many equate public sector saving to cutting Health and Education when there are a plethora of completely useless commissions and NGOs that are just crying out for euthanasia, sorry decapitation,death, finish,execution or any other description that spins your wheels.
November 2nd, 2009 at 11:32 am
gravedodger
The big three items of government expenditure are Health, Education and Social Welfare (with National Super being the largest component of the latter). I don’t have time to look it up now, but from memory these three categories make up at least 80% of government expenditure.
Therefore you have to make extremely major cuts it the remaining 20% of expenditure to afford even modest percentage increases in the Big Three. And Treasury certainly aren’t talking about modest increases here.
People on this blog frequently complain about the cost of minor government agencies, such as the Families Commission, Childrens Commission and Ministry of Womens Affairs. Trouble is, you could axe all three of them and it wouldn’t cover the National Super bill for a week. And that is at current rates, not some point in the future when the population is older.
People are welcome to debate whether a host of minor agencies should be kept or abolished. But they shouldn’t be under the illusion that it will make a great deal of difference to the government accounts.
Sad but true.
November 2nd, 2009 at 11:44 am
Why not make something similar to the Australian scheme, where everyone has money invested in a super fund and the pension is means tested. Many of the private fund managers over here have done very well even in the “recession,” and if you don’t like any of them you can set up your own self managed super fund.
You can be certain that in 2050 while the New Zealand government strains under the weight of ever increasing superannuation costs, the Australian government will not be paying in the order of 8-10% of its GDP to pensioners.
November 2nd, 2009 at 11:48 am
Oh yeah, forgot to mention – Aussies are far more financially literate than kiwis. Their current affairs shows are full of items about how the economy works.
November 2nd, 2009 at 12:25 pm
2025 looks OK, if it can be interpreted to mean “15 years after the decision has been made”. However, having said that, a 15 year lead time is reasonable for a change in value to super but is probably not essential for a change in eligibility age. It would take at least 15 years to replan my finances to make allowances for a reduced income in retirement but I could make the decision to continue working for a few years longer with much less notice. However if the notice period is too short it would probably annoy me enough to affect my voting intentions.
November 2nd, 2009 at 12:55 pm
DPF> You can’t be more wrong. 3.3% of GDP is around $6.5 billion a year in today’s terms. You won’t fund that in efficiencies, without actually eliminating some spending programmes.
I did say that “some” of the increased superannuation bill could be funded by efficiencies in other areas, rather than the whole amount. I think it is tempting to focus on the big ticket items, and forget that the minor programs add up to quite an impressive sum. Obviously it is hard to argue that we should borrow to fund the Race Relations Office and Ministry of Women’s Affairs, even if they don’t add up to much individually. But my experience with government IT is that projects will typically cost anything from 3 to 10 times as much as best practice. If IT costs 10% of government administration (which is a guess based on average IT spend ratios across all organisations), then you could save 5% of government administration costs just by running IT efficiently. If other aspects of government administration are similarly inefficient, then the savings are greater. I’m confident that you could save at least a billion a year through attention to detail.
But, if you’re after big ticket items, the million dollars a day that KiwiRail costs us is an easy target. The $450million NZAID budget is another, since it’d be hard to argue that people should retire later in order to fund overseas aid. There is $800million already. An ACC that blows $4.8billion in one year yields lots of scope for savings, even if those savings are in the area of compulsory premiums rather than taxes.
November 2nd, 2009 at 1:00 pm
How about the projected $1bill annually for the ETS carbon capping for emitters. That might come in handy.
November 2nd, 2009 at 1:16 pm
Bobux I accept your criticism as I guess I failed to be accurate in the comment I made. What I meant to portray would be best described as a frustration with the impression that cuts in spending will result in cuts to core services in Ed and health rather than cuts to wasteful under performing sections, the removal of which will have very little effect on what is delivered to the consumer. I fully realize the magnitude of the sums involved in vote health and education in relation to overall govt spending.
November 2nd, 2009 at 1:20 pm
You’d be crazy to rely on the govt for superannuation anyway.
At current levels it is substandard, future will be even worse.
November 2nd, 2009 at 1:56 pm
David
Good on you for kicking off this discussion. It’s something that needs to happen, especially as it has never happened before. We need decent data before we make a decision on this. You seem to be guided mainly by cost considerations. That is obviously important but there are other considerations – the impact on tax rates; an adequate period of notice (who are we really talking to – today’s 40 year olds or today’s 50 year olds?); growth implications (a higher state pension age implies higher labour force participation rates at older ages); the impact on ‘labour intensive’ occupations (for example drainlayers vs desk jockeys).
In the end, it is the producers (including many over age 65) who give up part of their claims on future economic output to support the dependent population (including the old).
And then there is the politics – as someone I know commented, when John key says “The Government is committed to these settings and I have said many times that I would rather resign than change them.” there is a difference between “I would rather” than “I will”.
Incidentally, you said that life expectancy was 60 in 1898. That may have been the “from birth” number but that is not the important one because of high infant mortality. The correct number is that life expectancy of males at age 65 was 12.7 years in 1898. For males it is now 17.8 years.
[DPF: I agree not just about cost. For example when we talk eligibility age, I plan to highlight how it impacts manual labour roles more.
What might be more useful for life expectancy is what it is for someone aged 18 as that is when most start to pay taxes. ie how many people will pay taxes all their life but never get super?
November 2nd, 2009 at 2:07 pm
I always liked the idea of tying national super to the CPI rather than the average wage.
For one thing, it provides another discipline on the Government to keep inflation low and avoid a blow-out on these expenditures.
November 2nd, 2009 at 2:22 pm
there is a difference between “I would rather” than “I will”.
Didn’t he sign something which said he would resign if he did?
November 2nd, 2009 at 3:57 pm
Oh lets get real, we all know that by the time most here are old enough to get super it will have gone the way of the Dodo. Many problems stem from the belief that the retirement system will be in meltdown in not to many years. Why do so many Kiwis buy that second house, no one in their right mind would place all their hopes in the ability of a future government to sort the mess. The only way this country can continue a viable super scheme is to fire up the bulldozers, bring in the diggers and erect the rigs. We have huge mineral wealth and we will need to utilise this resource or starve.
November 2nd, 2009 at 4:05 pm
I’m sorry David P but you either haven’t done your research properly or you just don’t understand. KiwiRail costing the taxpayer $1 milion a day? Well not really, KiwiRail runs at an operating profit; the $1 milion a day is the figure including the “buyback” which is a capital cost. The political opponents who throw these figures up are generally those who are looking for an opportunity to throw darts at the previous government no matter what.
The great irony is that I believe that (very reluctantly)Labour was pushed into supporting rail to get Green support. I think in the end that Labour actually realised that between themselves and the Greens that they actually had this right and in the end supported it. This couldn’t be said about too many of their joint projects BTW. Thanks to them we have a great national asset back in the people’s hands, it could have been bought back for less after the GFC, but this is always easy to say in hindsight.
I have no political allegiances so don’t have the problem of looking at these types of things through rose-tinted glasses.
Getting on to super, I have been creating my own super for years, I was lucky in that I understood this at an early age. What’s really required is the “Cultural” change and getting people to realise that the Crown won’t always be there to catch them when they fall. In the figures I’ve seen, the amounts people are saving or had saved for them aren’t enough. I’ve tried to save 15%+ of what I’ve earned to try and maintain my lifestyle in retirement
November 2nd, 2009 at 5:53 pm
David – 10/10 for addressing the problem – a solution would be to start now, the problem is small now but will grow so lets start with raising the retirement age 1 month each january which allows people to plan so a 55 year old knows his retirement date is 65 and 10 months. Waiting until 2020 or whatever means when you increase the retirement date by say 2 years you have some very unhappy people who unexpectedly have to work longer due to them being born a bit late and of course employers have the problem that their planning for the replacement is now stuffed. Another benefit is the cost savings accrue earlier albeit in slowly increasing increments. As for waste I run a small business and watch the bottom line carefully but if I had to I could reduce costs by 5% I reckon the public sector can do at least that.
November 2nd, 2009 at 7:36 pm
Rationale>Well not really, KiwiRail runs at an operating profit; the $1 milion a day is the figure including the “buyback” which is a capital cost.
So if you spent $10million building a hotel and your income only just covered the wages of the receptionists and cleaning staff, then you’d decide this was a triumph because it was making an operating profit? Even as the vale of the hotel was reducing by the day, you were paying out $1million a year in interest, and you’d have to stump up another $10million to replace the hotel once it was worn out?
In the real world, capital has a cost. The value of our “investment” in KiwiRail reduces by hundreds of millions of bucks each year. And KiwiRail can’t electrify Auckland railways, build the Auckland city loop it wants, or buy new trains in Auckland or Wellington out of its income, but wants taxpayers to pick up the tab. It is an unsustainable drain on the economy. We can’t afford to keep subsidising railways if we want to retire at 65.
November 2nd, 2009 at 7:51 pm
On the whole, I’ve given up thinking that I can retire at 65 and have moved towards 70. While it sounds great to say we can rejig things, the simple reality is that our population will age (although nowhere near as much as many countries) and we will have to work longer to achieve the same levels of income that our parents might have enjoyed. We also have significantly higher expectations (I certainly do) of what we want out of life, especially in material and service terms. So given how much more I consume, compared with my parents or grandparents, I’m not sure an additional five years of work is unfair.
Regarding the actual NZ Super I think raising the compsulory age from 2025 onwards and making the Tier 2 scheme more inline with superannuation (rather than using it to help provide for short-term requirements) would be a good idea. It might not be such a bad idea also to increase the residency requirement from 10 years to, say, 20 years with a minimum of 10 years continuously in the country and 10 years in the country since birth. You could then have an ‘Overseas Rate’ for people who choose to move abroad and people who come back would have this applied to them until they meet the 10 year requirement again (or something to that effect).
The main thing is that while the 3.7% increase in GDP requirement that we’re going to face in 2050 sounds small now, it’s just the super cost. It doesn’t, I presume, take into account the costs we’re all going to have through health care, additional public services, and so forth. So we’ll seriously need to consider adding a few more years on, which will increase the labour force, increase the period we can save for Tier 2, and also increase the period we’re paying taxes into Tier 1.
November 2nd, 2009 at 8:09 pm
On regional variability…
This is a perilous path. If it is to reflect living costs, presumably housing, will it take account of things like climate (heating requirements) and other regional variations?
One national level encourages people to retire to cheaper-cost areas, and should help slow the growth of Auckland into a huge distortion at best an economic drag on the rest of the country and at worst gradually weighing it down into the Third World. As pointed out before, if New York had the same proportion of the American population as Auckland does of the NZ population, then New York would have more than 100 million people.
Cost of living in Auckland will continue to outpace costs in the rest of the country. Paying Auckland retired people more than retired folk in the rest of the country would be unfair to national taxpayers.
November 2nd, 2009 at 8:13 pm
I think the solution to the problem is the abolish Superannuation altogether.
It is an appalling situation when elderly people receive handouts from the State for no good reason whatsoever.
Those amongst the population who engaged in thrift, hard work, savings and investments should be able to provide for themselves in their old age.
Those who were too busy wasting their money downing jugs of Lion red and eating hamburgers, along with HP agreements, lotto tickets and other unnecessary things to either live within their means or to save and invest should either continue working in their old age or be taken care of by their children.
If this category of people had not been such appallingly bad parents (they were) their children would willingly look after them (they won’t) and only have themselves to blame; accordingly they should not expect the rest of us to chip in and reward their slothful and imprudent behaviour.
Abolish pensions immediately is what I say!
http://www.nightcitytrader.blogspot.com
November 2nd, 2009 at 8:17 pm
You may not see the relevance David in comparing Kiwisaver with my own funding but it points out that though it may come hard on today’s folk to ‘loose’ 8% to 15% of their income, as they ‘waste’ their money on consumer goods, housing, entertainment to keep the ecconomy going, they need to bite the bullet to provide the capital for the ecconomy to grow to look after them in their old age. I was fortunate to start my saving before I got onto the consumer bandwagon, I spent what I saw in my pay packet after tax and savings had been deducted. I can see it is hard on the self employed to do this and many of them think that they can do things better than the super funds but it is a case and need for a uniform system with everbody participating.
I appreciate that the ecconomy would slump, the consumer part of the ecconomy anyway, with all that money taken out of consumer spending but it is the bullet the country needs to bite despite the hardship it would impose on todays generations.
Sorry if you think I deserve more demerit points for this but I think you ignore the real aspects of the problem of the population spending instead of saving.
There is also currently a lot of talk about Key and English refusing to talk about raising the retirement age though I heard a ‘
throw-away’ line from English where he said he was happy to talk about it but Govt policy was not to change things, at least during this first term. He didn’t say it that way but I’m putting two bits of his words in my own for clarity of the intent I got from the interview. So you agree with English and he with you.
My answer to your today’s query is ‘don’t put off until tomorrow to do something you can do today’.
November 2nd, 2009 at 8:39 pm
Wow – you don’t understand at all do you. “The Railways” were sold for $400 million in 1993. So, the money used to buyback the railways plus the interest, should be treated as a reverse entry of the way it went into Consolidated Revenue back in 1993. Perhaps the profit from that interest could go to Superannuation or perhaps some of the interest on that money pays for the $100 million the previous government apparently had to invest in the rails to get them back up to scratch? There is no “purchase” debt to service then, personally I consider the railways in this light to be good value for my tax dollar and a hedge against possible future fuel problems.
One doesn’t have to research far back or be an Albert Einstein to realise that the asset was run down badly when the government buy-back occurred and had been under or non-invested in for 20+ years. I don’t blame those involved for bleeding the asset dry, I think that most companies would have done that. I had shares in one or two of these companies which hasn’t hurt my super.
You’ve brought in the suburban rail stuff, eg the Auckland CBD Loops, electrification etc isn’t part of the function that KiwiRail’s business services. Why have you done this? In reality these are local government and central governments infrastructure investments and whether they keep ploughing money into them to improve them is their business. KiwiRail is just the instrument to provide these types of services etc
November 2nd, 2009 at 10:24 pm
gravedodger
Sorry if I sounded a bit harsh – I appreciate that cutting the health budget doesn’t automatically mean fewer front-line services.
In the real world, some departments (and countries) are better run than others. But is doesn’t pay to overestimate the gains that can be made from ‘efficiency savings’. Every opposition party claims they will cut waste, every government struggles to deliver on the promise.
Sure, you can trim a bit here and there, as the present government is doing. But the only way to make substantial savings is to have the government stop doing stuff. This is rarely popular with either the people who were doing the stuff, or the people on whose behalf it was being done.
Michael Littlewood – congrats on sparking an important debate.
November 3rd, 2009 at 11:32 am
Hey DPF, what about a poll to find out how old your audience is? Could be interesting to compare with the opinions here..
November 4th, 2009 at 11:05 am
Elijah … a convienient approach for those hard working provident folk until they consider the cost of not looking after those spendthrift people as they create mayhem becuase they have no money and no future except the grave because they can no longer earn an adequate income. Sure put them in jail or concentration camps but that costs even more.
While the figures may seem horrendous I suspect like all wishing to make a case they relate to the total gross cost of providing superannuation and the income tax deducted at source and GST collected on most of what is paid out actually returns to the government a goodly sum.
So to answer DPF’s question as to where will the money come from I suggest that it is simply tokens going around in a circle and the key point is the willingness to make to payments to the aged instead of younger folk trying to keep it all for themselves. Super at its current level gives little or no room for provident saving, not that one expects to do that in retirement, so apart from accomodations costs the GST on the balance returns to the government.
A more realistic question is to ask, can the productivity of 50% of the population support the 100% … I’m sure it can and will, though I will not be around to see it happen. One way is for the Government to maintain a minimum level of income for everybody, workers and non-workers at all age levels. The arguments are between capitalism with its ‘devil take the unfortunate’ attitudes and collective responsibility by all for all. Somehow future generations have to find a balance between the camps.