— The Project NZ (@TheProject_NZ) August 29, 2017
Australia’s compulsory superannuation scheme is often held up as an example we should follow.
However, this exchange during Question Time yesterday threw up a little-known fact:
Hon David Parker: Does he accept that Australia’s successful universal workplace savings scheme, introduced a decade after National axed ours, is why Australia owns its banks and ours, and why Australians have higher wages?
Hon BILL ENGLISH: No, but I do know that two of the effects of it in Australia are that Australians have less money invested in businesses than New Zealanders—
Grant Robertson: Rubbish.
Hon BILL ENGLISH: —no, it is true—and its rise in household debt directly parallels its rise in nominal household savings. But if the member believes he wants the Australian system, he should be open with the New Zealand public that he is going to strictly means test national superannuation. There is nowhere in the world that has compulsory superannuation and universal national superannuation.
How many people who urge compulsory superannuation know that nowhere that has it also has a universal scheme?
If superannuation savings can be either compulsory or universal how popular would compulsion be?
Hon David Parker: Will the Minister now admit that National was wrong to vote against KiwiSaver, which it now supports, and to call the Cullen fund, which it now supports, a dog?
Hon BILL ENGLISH: No, but if the member is going to advocate what he calls universal but is actually compulsory superannuation, he needs to explain what impact that will have on New Zealand superannuation. I think those who have been in this Parliament for a while will recognise that we have spent—what—20 years in vigorous discussion over the nature of national superannuation. It ended up universal because that is what the public wanted, and Labour is now advocating the Australian scheme, which involves strict income testing of national superannuation. I invite the member to announce that at the next Grey Power meeting he goes to.
. . . Hon David Parker: Is the Minister able to table any document that he has received that proves the assertion he made in his last answer, which was that the Labour Party is moving to a meansbased superannuation when that, in fact, is not our policy?
Mr SPEAKER: Order! It is quite a different question, but carry on.
Hon BILL ENGLISH: If I could find a coherent, rational, sensible Labour Party document on this matter, I would table it. But I cannot, so I will table the results of the 1975 and 2008 elections, where these issues were litigated.
What we do know is that Labour plans to increase the age of eligibility for superannuation.
It also plans to tax more and spend more which will aggravate inflation which will erode the real value of wages making it more difficult to save and erode the real value of any savings, be they voluntary or compulsory.
The Labour Party is selecting candidates for several electorates this weekend.
The Gore Ensign reports the Clutha Southland candidate will be selected by a panel of senior labour Party representatives and some local members.
There is only one candidate for that position and while party secretary Tim Barnett wouldn’t confirm this, it is thought to be a health researcher Elizabeth Craig.
This is a very blue seat and even though incumbent MP Bill English isn’t standing again, odds heavily favour the National Party candidate, whoever s/he will be.
Because of that it’s unlikely there was much competition for the Labour candidacy.
Other seats will be more hotly contested and because of the party’s female quota there will be a question over any women selected – did they get there on merit?
Are they there because they will be the best candidates or because they are women?
That won’t always be the same thing.
Of course candidates – men and women – aren’t always the best people, but that’s not usually a result of a policy determined to select anyone but the best.
And the policy raises another question – does it comply with electoral law which requires candidates to be selected by democratic processes?
New Zealanders have been accused of being poor savers for years, but are we really?
David Bennett: How has household savings changed recently and what reports has he received on household wealth?
Hon BILL ENGLISH: I think, as we are familiar with, official measures show a significant improvement in the last 3 years, from dissaving of 7.1 percent of household income in 2007 to just positive household savings more recently. Alongside that, though, there is a maybe confusing report from the Reserve Bank, which has recently highlighted that in measuring household wealth its statistics exclude some important items. For instance, when it measures household wealth it does not include equity in farms. It does not include equity in shares in some businesses and commercial properties and forests, and nor does it include some types of foreign assets held by New Zealanders. It estimates that when these items are included, household net wealth is in fact $167 billion higher than it thought, or around 25 percent—that is, the Reserve Bank’s revision of the numbers indicates households may be 25 percent wealthier than they thought.
Trans Tasman offers further explanation:
. . . The reworked figures put NZ not as an outlier among developed nations for its low rate of savings but more in the mainstream. For the best part of a generation it’s been part of the NZ economic story that Kiwis focus on housing as their main form of saving, but the revelation household wealth, following a re-estimation of non-housing assets , is more evenly balanced between property and other assets, will have implications for several major areas of Govt policy ranging from retirement to housing needs. As a result of the information from the RBNZ, Finance Minister Bill English has Treasury testing the figures and reviewing the implications.
This is encouraging, better savers have more security, more choices and are better able to look after themselves.
Better domestic savings also reduce reliance on foreign savings for investment and growth.
Government’s role in encouraging savings include policies which encourage economic growth and discourage inflation.
The first helps lift incomes and the second protects the real value of wages and savings.