Brash isn't proposing big super changes

Means testing superannuation and tax incentives for savings are off Don Brash's menu.

Tuesday, October 7th 2003, 2:33PM

by Rob Hosking

National’s Finance spokesman has reiterated his party’s commitment to maintaining “65 at 65” superannuation payout but reiterated that the country cannot afford to pay this indefinitely.

“It has been suggested - most recently by Grey Power - that we want to drastically change the current parameters of superannuation,” Brash says.

“That isn’t the case at all.”

Brash heads National’s policy committee and says superannuation is one of the policies currently being considered.

He also rules out any sort of means testing, saying that apart from being politically unsaleable ,it sends the wrong messages if a government wants to encourage savings.

But the retirement age will have to be addressed eventually, he believes.

“It isn’t something that is going to change in this Parliament or the next one or even the one after that.”

He points out that the Retirement Commissioner has identified the age of retirement as something that some future government will have to tackle, given the doubling of those aged over 65 by 2040.

Brash points out - as he has done previously - that when the Old Age Pensions Act was passed in 1898 the age of eligibility was 65 - and the average life expectancy was 59.

By 2040 the average life expectancy is estimated at 84. Superannuation is something both parties on the centre-right - National and Act - are known to have internal differences on.

As for discussing the matter between the parties, he says no talks have taken place on the issue, but that doesn’t rule them out.

“I do think that New Zealanders would feel assured if they were to see greater multi-party agreement on superannuation.”

Brash doesn’t rule out tax incentives for savings, although he sounds sceptical.

“The evidence that they actually add to the sum total of savings is skimpy indeed.”

National’s policy at the last election included some tax breaks for savings. That does not mean the policy will stay - superannuation is, with other policy, undergoing a major rethink.

“However, I do worry that our savings as a nation are not adequate. I think we have become too dependant on the savings of foreigners over a long period. An increasing proportion of GDP going towards paying the interest on that capital we have collectively borrowed.

“But it is totally unclear to me what policy can do about that.”

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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