Latest / Best of Business / Susan St John: Auckland University Associate Professor of Economics on Labour ruling out changes to retirement age

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Susan St John: Auckland University Associate Professor of Economics on Labour ruling out changes to retirement age · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 1: Good Afternoon.
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  Speaker 2: Labor has ruled out any changes to superannuation if it's
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  Speaker 2: re elected this year. The National Party looks like a
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  Speaker 2: wool campaign on lifting the age, and for a little
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  Speaker 2: while there as seen Labour was up for some sort
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  Speaker 2: of change because Chris Hepkins seemed open to means testing
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  Speaker 2: when he was on air with Kerry Woodham in April.
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  Speaker 2: You know, there are questions about whether somebody who is
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  Speaker 2: still working full time earning a sex figure salary should
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  Speaker 2: be claiming superannuation.
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  Speaker 3: Susan st.
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  Speaker 2: John is an honorary Associate Professor of Economics at Auckland
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  Speaker 2: University and a social policy advocate and with US High
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  Speaker 2: Susan Hi Heather Susan, given how expensive superannuation is becoming
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  Speaker 2: and quite rapidly, is it an option for Labor not
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  Speaker 2: to do anything.
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  Speaker 3: Well, I think they've got to identify what the problem
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  Speaker 3: is and I think that's one of the issues. People
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  Speaker 3: have put the emphasis on the cost the expense without
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  Speaker 3: thinking about what is the X issue right now and
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  Speaker 3: the actual issue. As I would say it is that
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  Speaker 3: there's an unfairness, an intergenerational inequity in paying a generous
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  Speaker 3: or still taxed, but nevertheless a lot after tax pension
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  Speaker 3: to people who are in full time work or who
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  Speaker 3: have considerable wealth. And if we don't grapple with that
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  Speaker 3: into generational equity issue, we're going to find increasingly that
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  Speaker 3: social cohesion is going to widen, that younger people are
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  Speaker 3: going to become ever more disinterested in remaining in New Zealand.
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  Speaker 3: They'll see nothing for them. It's a really important we
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  Speaker 3: deal with some of the very complex social issues that
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  Speaker 3: are emerging by redirecting some of the money from superannuation.
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  Speaker 4: Okay, so if your problem is that we are paying
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  Speaker 4: for the pension for people who are still in work,
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  Speaker 4: then is means testing not the solution there?
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  Speaker 3: Well, means testing is an ugly way of doing it.
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  Speaker 3: And really we've got to be proud of what we
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  Speaker 3: do and having a universal pension that provides a basic
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  Speaker 3: flaw for everyone and a cushion that even the wealthy
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  Speaker 3: can fall back on if they need it. So that idea,
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  Speaker 3: that unique idea, is a very precious one and we
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  Speaker 3: don't want to go down the path of a complicated
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  Speaker 3: welfare benefit type income test or an asset and income test,
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  Speaker 3: which is the men's testing. It introduces all sorts of
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  Speaker 3: disincentives to work to save and it could be really ugly,
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  Speaker 3: like involve a joint test as they do in Australia,
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  Speaker 3: which New Zealanders would not like at all.
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  Speaker 4: So do we get back to the cytax.
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  Speaker 3: Well, it is a compromised position and people forget that.
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  Speaker 3: For thirteen years we did operate a surcharge on New
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  Speaker 3: zealand'superannuation recipients and it worked well and it was cemented
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  Speaker 3: into the accord between the three major political parties in
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  Speaker 3: nineteen ninety three. Now, eventually it did fall apart. Winston
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  Speaker 3: Peter's had a role in that, but being on the
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  Speaker 3: Todd Task Force in nineteen ninety seven, we bemoaned that
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  Speaker 3: we really thought it was a big mistake and said
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  Speaker 3: in the last report that New Zealand will have to
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  Speaker 3: revisit this issue one day, and I think that day
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  Speaker 3: is now, and I think again it could be the
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  Speaker 3: way in which we can get political agreement from both
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  Speaker 3: extremes of men's testing on the one hand, raising the
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  Speaker 3: age on the other hand, or even cutting the level
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  Speaker 3: by not indexing properly. A middle ground could be the surcharge.
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  Speaker 4: Has anybody done any numbers to find out how much
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  Speaker 4: it would save us?
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  Speaker 3: Yes, we've costed it. We've been working with treat hum
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  Speaker 3: much over about the last five years. We've worked out
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  Speaker 3: it depends how you set the increase in tax on
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  Speaker 3: the superannuans, other income, or even total income including New
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  Speaker 3: Zealand supper. You can structure it in various different ways,
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  Speaker 3: but we did it in a way that would mean
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  Speaker 3: that the bulk of supernutants, maybe a fifty sixty percent,
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  Speaker 3: would be very little affected and you would only be
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  Speaker 3: getting it back from the top two thirds or so.
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  Speaker 3: And in doing that, with a modest increase in taxes
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  Speaker 3: on those people, you could generate easily two to three
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  Speaker 3: billion dollars.
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  Speaker 2: All right, okay, Susan, thank you very much. Interesting idea, Susan.
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  Speaker 2: Listen John Who's an honorary Associate Professor of economics at
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  Speaker 2: Auckland Universities.
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