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New Zealanders are braced for months, perhaps years, of changes in the way they and their Government spend their money.
The coronavirus pandemic has torn up the play book. Personal finances are being reassessed as our politicians reassess the limits of the public purse.
The Government’s pandemic recovery Budget was both significant and necessary, but the road to pay for it will be dotted with political potholes.
We can expect to hear much more about sustaining and financing the recovery as competing ideals become competing promises ahead of the election.
But as the parties further develop their strategies for a long-term fightback, the next government will have to cut its post-Covid coat to suit its cloth.
Gross domestic product will take a sizeable hit for as long as the global pandemic lasts, and then some. Tax receipts will slump, and stay there, until exports and business prospects improve.
Meeting this challenge presents myriad problems during an economic rebuild. It is difficult to argue for cuts to health, education and social services when the pandemic demonstrated their importance. Sizeable infrastructural investment is hard to avoid when jobs are needed.
There have been no calls, yet, to tighten up on welfare. In fact, the Government’s Covid-19 Income Relief Payment expands it to the point those unemployed before the lockdown could — and should — argue they are due more from a system that now seems less than equitable and fair.
But if beneficiary bashing may prove politically problematic now that so many people and businesses have had Government support, another benefit type is ripe for the kicking.
New National Party leader Todd Muller has reaffirmed his party’s position that the age of eligibility for New Zealand Superannuation should increase from 65 to 67, between 2037 to 2040.
They are concerned it will become increasingly unaffordable, especially given competing claims on the public purse.
Such competing claims were acute during the Global Financial Crisis, and were why the then National-led government suspended payments to the superannuation fund for eight years. The current, Labour-led Government resumed the payments and committed to keeping the age of eligibility at 65.
The scheme has been considered one of the cheapest in the world. Productivity growth has been touted as keeping it so for at least another 40 years. The best way to make superannuation affordable is to have a buoyant economy.
Now, there is every likelihood superannuation will soon make up an even greater proportion of Government spending as the country’s GDP contracts. Productivity growth is anyone’s guess. Economists suggest this will influence views as to whether the country can afford a universal package, in its current form, and that no cards must be left off the table.
Leaving it as it is means the taxpayers funding others’ retirement will face a day of reckoning before they, too, are eligible for their guaranteed fortnightly welfare payment.
At the same time, raising the age will disproportionately affect those in physically demanding jobs, or whose health makes working past 65 painful or difficult. The longer the wait, the more the wealth inequality for women and Maori at retirement grows.
It is not means tested, but should it be; should there be an alternative safety net for those who cannot work up to the new retirement age; should lump sums be offered, and should taxes grow to reflect the cost of provision, rather than come out of what might otherwise be spent on health and education?
This growing list shows the future of universal super should be neither a binary nor a political discussion. It also suggests this is a debate whose importance transcends the current crisis and the turmoil of an election campaign.
If it has to be considered, it must be done in such a way that the experts, the opinion-drivers and — crucially — the public, can blow the whistle on years of kicking this enduring political football.