Prebble advocates individual accounts
ACT leader Richard Prebble tells the Finance and Expenditure Select Committee what he thinks of prefunding
Wednesday, May 2nd 2001, 10:31PM
I thank the Committee for allowing me to make a submission to the Select Committee hearings on the New Zealand Superannuation Bill (the Cullen Bill).I realise it is unusual for a political party to give evidence to a Select Committee. I am doing so because superannuation is so important.
Superannuation is important because this Bill is the largest spending proposal in our Parliament's history. The proposed fund will reach $65 billion dollars or $50,000 per household.
Superannuation is important for another reason. Those who have retired have no way to adjust to changes in their income. We owe it as a Parliament to ensure that those whose work created our nation have security in retirement.
ACT believes we should seek a genuine bipartisan solution to the question of superannuation. This would require all parties to be willing to modify their position and be willing to meet and examine the issue just on the basis of what is good for the country. ACT is willing to do this.
We wrote after our party's founding, and asked to be included in the Accord talks and were told that it was only for parties with elected MPs. After the 1996 election we again asked to be included and were refused.
I believe it was very regrettable National made changes to super without using the Accord process.
This latest change, and it's another major change, is again without consultation or an attempt at a genuine consensus.
As MPs, this Committee should report back to the House that government should seek not just a multi-party consensus, but to try to achieve a genuine consensus with the community.
The Prime Minister's threat to make superannuation an election issue may be good partisan party politics, but it's not good for New Zealand.
In the spirit of seeking a genuine consensus, ACT has decided to share polling we have done. It's not scientific, thought the political scientists say that the number of responses is large enough to mean that the results are significant.
2,000 ACT Party members.
2,500 responses from the public. (This poll was taken in Auckland. We are currently polling households in Wellington and Christchurch to see if the results are similar.)
There is overwhelming support for savings to be in your own name. 79% of the public surveyed favoured savings in their own account. It's not hard to see why. When the savings are in your name, it's your money and no politician is going to touch peoples' own savings.
ACT supported the Bill going to the Select Committee. This is because we want to de-politicise the issue.
We have carefully studied the Bill and believe that it does not achieve sustainability. The Bill does not make superannuation any more affordable. Some people just pay twice.
As the fund is wound down to zero, we see huge future political instability.
Why should a person born today, who will still be alive when the fund is zero, support the scheme?
The scheme is essentially risky, it puts all our eggs in one basket.
If the New Zealand Investment Fund advice to the Committee is correct, then over three dollars in every four will be invested overseas. If, as I think we all agree, the real way to secure the affordability of super is to grow the economy, how does sending $50 billion of taxpayers money overseas assist New Zealand?
There is real a danger that false claims by politicians that this scheme means people's retirement is secure will lower savings.
The latest ISI survey which shows the number claiming to be saving ahs dropped from 61% to 55% indicates that this may already be happening.
This scheme locks in unaffordability and kicks the problem out to the next generation!
I believe we can do better - we must do better.
ACT urges the focus shift to one of long term sustainability. To a genuine saving scheme rather than a scheme that runs down to zero. ACT believes the scheme will have more credibility if it was to have contributions into individual accounts.
While we note the survey ACT has done favours compulsory savings and the latest ISI survey shows 71% of the electorate favours compulsory savings, ACT is aware of the very strong rejection of the 'Peters Scheme'.
The answer may be to allow an 'opt-out' for the self-employed and those who can show they have made adequate provision for themselves.
A majority of our poll supported such an 'opt-out'.
ACT's poll indicates that the electorate:
1. Realises the present scheme is unsustainable;
2. Does not support the government scheme;
3. Does want a scheme that allows individuals to save in accounts in their own name;
4. Wants an 'opt-out' for those who can show they have made adequate provision for their own retirement;
ACT believes it would be irresponsible for the committee to ignore this evidence. We can do better than this proposal.
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