Column: The history and irony of superannuation
Rob Hosking suggests there is a certain irony in the Government's latest superannuation policy.
Sunday, October 22nd 2000, 10:37PM
by Rob Hosking
Whether they come from senior politicians or from other parties with an interest in the issue, such pronouncements invariably follow the following form.
Firstly, there is the statement that politicians have mucked around with this issue for too long. Generally the mid-1970s and the spectre of Muldoon is invoked, although if one is looking for a starting point it might be better to go back to the Holyoake government¹s decision to decouple the pension from the 7% deductions that had made from wage packets.
Then there is the call for consensus on the issue. This call is made particularly if the speaker is an MP with the kind of quasi-Churchillian tone and rhetoric that viewers of the old British comedy Yes Minister might recall Jim Hacker indulging in when he was being particularly silly.
The speaker then calls for this consensus to form behind their own ideas, and usually makes the claim that anyone not doing so is playing politics and being irresponsible. Winston Peters used to be particularly good at this during his time as Treasurer. In rugby terms it is known as getting your retaliation in first.
We had a lot of that in recent weeks.
"Our history on this issue does no-one any credit," proclaimed minister of finance Michael Cullen. "It is time we put the backbiting and politicking behind us for the good of the country. Doing nothing is not an option."
There was also much talk - from Cullen and other government MPs of how the "public is fed up with politicians squabbling on this issue."
Well yes, the public is always fed up with that, and it doesn¹t seem to make much difference the rest of the time.
What was different this time of course was the Dr Cullen explicitly ruled out consensus as the aim. A former historian, equipped perhaps with a greater sense of past victories and failures than many other MPs, he noted that consensus tends to form after the event.
In particular, he noted that the US social security fund, begun by President Roosevelt in the mid-1930s, was attacked bitterly by its Republican opponents at the time "but when they came to power they tiptoed very carefully around it, and they have continued to do so ever since," he pointed out.
The comment was illustrative not only of Cullen¹s sense of history but also of his ambition. The superannuation fund may not be as big as that US scheme, but in New Zealand terms it is still of considerable size. If successful, it will be a considerable monument for the minister particularly if, as has been suggested around Parliament, this is to be his last term of office.
The wider economic impact of the fund is still very fuzzy. The papers released thus far from the Treasury focus mainly on the likely impact on the government accounts over the coming years. If governments are able to discipline themselves a somewhat heroic assumption at this point, but you never know your luck the fund is going to act as a kind of add-on to the Fiscal Responsibility Act, requiring continued surpluses.
Indeed, it could reinforce the act. The existence of the fund, and the necessary contributions to it, should focus attention on that part of the Budget. A future government of any political stripe which deviates from the necessary contributions is going to be punished by the markets, and fairly quickly.
Old age pensions were the starting point of the welfare state in New Zealand as elsewhere. That historical point underlines their importance to the political Left in this country. There is an irony that future pensions may be guaranteed by the operation of the money markets - whose operation those early leaders of the Left detested - but it is an irony which Dr Cullen, whose claimed fiscal conservatism has been questioned, would appreciate.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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