Prime Minister Jacinda Ardern says New Zealand will be able to cover the costs of superannuation without raising the age of entitlement, following a Treasury report flagging a threat of unsustainable future debt.
The National Party says the Government must avoid wasting money, but would commit to no firm plan for when or how the age of eligibility should be raised.
The latest advice from Treasury is that cost pressures will ramp up sharply as large numbers of New Zealanders head for retirement and, on the current path, will lead to an unsustainable level of debt.
The advice said it would mean increased health costs, and the Government would need to do something.
“Driven by lower average fertility rates and improvements in life expectancy, 26 per cent of the population is projected to be over 65 years old by 2060, compared to 16 per cent in 2020,” it said.
“Net debt is likely to be on an unsustainable trajectory if expenditure and revenue follow historical trends. Our projections indicate that the gap between expenditure and revenue will grow significantly as a result of demographic change and historical trends, in the absence of any offsetting action by the Government.”
Although Bill English began work to increase the age of superannuation in the time he was prime minister, John Key had ruled out ever raising the superannuation age, as did Ardern.
Ardern said while the age would not rise under Labour, the Government had resumed payments to the super fund.
“I do think people want certainty, people will save with an expectation of when they will retire and my view is that I need to give certainty that while I’m in office, what people can expect.
“In our view so long as we continue to contribute, and we are … then we should be able to give that ongoing certainty to New Zealanders about when they’ll be able to retire.”
She said the Government had no plans to make adjustments such as increased taxation or matching the Super Fund to wage inflation to shore up government debt, but did not rule it out either.
“I’m not going to get into ruling in and out every single policy under the sun, we never get into that game.”
National Party leader Judith Collins said the Government was being wasteful.
“It is irresponsible of the Government continuing to spend money like it is with no thought as to where it comes from at the same time as we have 4500 kids in [emergency housing] hotels.
“We are a small economy, we now have about $100 billion worth of debt, up from about $50b when the govt took over, and you can blame Covid all you like but ultimately – as those reports show – there was a problem before the Government took over and the Government had no plan for it.”
National did not have a specific plan for raising the age of eligibility at this point, however.
“This is not something that is to be announced today because it’s something that we have to have a whole plan on … but it is ultimately the Government’s decision to waste enormous amounts of money and not to actually put the focus on where it needs to be.”
The Government had inherited finances that were in a very good state, and had chosen to throw away much of the discipline brought in for spending on public services while “requiring government departments to actually have outcomes that work for New Zealanders”, Collins said.
“Instead we’ve seen a Government that has employed 10,000 more bureaucrats in Wellington for absolutely nothing more than, it seems like, some more reports that they ignore.”
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