Act mirrors NZ First's position on pre-funding

The Act Party has come as close as it dares to endorsing the government's superannuation scheme.

Tuesday, November 14th 2000, 12:00AM

The Act Party has come as close as it dares to endorsing the government's superannuation scheme.

The party's leader, Richard Prebble, committed Act to supporting the introduction of Minister of Finance Michael Cullen's pre-funded superannuation scheme, but said that the scheme needs improving.

"This scheme, as it stands, is an improvement on the existing superannuation scheme, which is not sustainable," he said. "Even the Winston Peters' compulsory super scheme was an improvement, and that is why we supported it in 1997," he said.

"We had great difficulty in persuading some of our own supporters of that."

Act wants the pre-funded scheme to be changed so individuals can have their own savings accounts in their own name with private providers.

New Zealand First leader Winston Peters has advocated a similar approach.

Act has gone through major internal battles over this issue, as Prebble acknowledged this week: "Some within the party have not wanted Act to give the coalition any support."

Cullen had indicated he was not uncomfortable with the idea of individual accounts in private meetings, Prebble said.

Act still sees a number of problems with the Cullen scheme, he said.

"As proposed, the scheme only smooths out the problem for baby boomers like the Finance Minister, or myself. A twenty-year old will pay into the fund all their working life only to find the fund will ‘dry-up’ when they retire."

The party's other issues with the government's fund are:
* there is still the possibility of political control ? Alliance and Green party proposals for ethical investing will introduce an element of politics, and potentially make the scheme less profitable;
* At 50% of GDP, the government owned fund could dwarf the rest of the New Zealand economy ? "It's socialism by superannuation", Prebble said.

* The government has budgeted to put only $600 million into the fund in 2002, when Treasury figures show it needs another $1.5 billion.
* The scheme is being presented as if it were something for nothing, instead of coming from surpluses which Act would rather see distributed in tax cuts.
"But Act believes that even with these concerns, the plan is better than doing nothing."

For fll details of Act's position CLICK HERE

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