Latest / Best of Business / Brad Olsen: Infometrics principal economist on the future of superannuation

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Brad Olsen: Infometrics principal economist on the future of superannuation · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk sed be
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  Speaker 2: This apparently's fight us It. Yeah, that's a bit more
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  Speaker 2: fighty all right, Brad, that's for you, Brad Olson, Informetric's
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  Speaker 2: principal economist. Because Brad, you're gonna have a fight with
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  Speaker 2: me about superannuation, aren't you.
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  Speaker 3: I don't think it'll be a fight. I think it'll
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  Speaker 3: be a good rationed debate. You know, we'll have some
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  Speaker 3: some good information coming through and we'll see what principal
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  Speaker 3: points win at the end.
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  Speaker 2: Right, what is your problem with my position?
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  Speaker 3: My problem is that you want to you're defending your
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  Speaker 3: trying to keep the pension, and I get that. Your
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  Speaker 3: point is also that you want to see some of
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  Speaker 3: the welfare support that's being provided out there. Trend Beck
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  Speaker 3: as well. But let's get real on the New Zealand
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  Speaker 3: super conversation. At the moment, New Zealand is spending twenty
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  Speaker 3: three point two billion dollars on super. That's more than
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  Speaker 3: the entire education budget. It's far more than any other
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  Speaker 3: benefit we've got coming forward. Is it is increasingly expensive,
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  Speaker 3: and I think the challenge that I've got on super
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  Speaker 3: and maintaining it at its current rate, is that people
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  Speaker 3: are living longer, We've got more older people coming through.
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  Speaker 3: At some point we as a country are already having
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  Speaker 3: to start deciding what we're spending on or not. And
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  Speaker 3: at the moment, we're paying for people to be old
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  Speaker 3: over other stuff.
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  Speaker 2: Okay, what is the total welfare budget in New Zealand?
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  Speaker 2: How much do we allocate to it?
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  Speaker 3: It's a round about forty billion dollars in the last
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  Speaker 3: year again, twenty three billion of that being New Zealand
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  Speaker 3: Super alone.
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  Speaker 2: Okay, so there is a huge amount. And in that
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  Speaker 2: we will be counting I mean, that's not even everything
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  Speaker 2: that I have a problem with, but in that we're
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  Speaker 2: counting the winter energy money, We're counting the assistance for
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  Speaker 2: working for families. Everything's in there, right.
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  Speaker 3: That's the Yep, you've got everything from job seeker about
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  Speaker 3: four point six billion through to working at winter energy payment.
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  Speaker 2: Okay, brilliant. So we've got we've got a lot of
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  Speaker 2: money that we can peel back here. Now, why would
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  Speaker 2: you not start by pet because I don't mind moving
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  Speaker 2: the pension. My only argument is prioritizing, right, why would
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  Speaker 2: you not start by taking money off people who actually
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  Speaker 2: can pay for things themselves. For example, students.
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  Speaker 3: Sorry like like like older people and again you've got.
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  Speaker 2: Let me finish. I'm talking about students, right, students who
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  Speaker 2: are in the third year of university who up to
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  Speaker 2: now we're paying for it themselves. Why are we not?
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  Speaker 2: Why are we suddenly paying for it? Why don't we
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  Speaker 2: take that away from them first?
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  Speaker 3: Well, because in terms of being for back, it's the
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  Speaker 3: New Zealand super where you'll get the biggest change there.
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  Speaker 3: I mean, look, you talk about people who can pay
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  Speaker 3: for it themselves. At the moment, fifty percent of sixty
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  Speaker 3: five to sixty nine year olds currently still work and
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  Speaker 3: we are giving them money every single week for just
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  Speaker 3: being over the age of sixty five. There's no means
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  Speaker 3: testing that goes on at all. So in terms of
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  Speaker 3: I mean put it this way, at the moment, New
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  Speaker 3: Zealand Souper is the biggest welfare line. The second largest
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  Speaker 3: is Job Secret for pack Hold.
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  Speaker 2: We're not going to take all of it away, Brad,
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  Speaker 2: how much are we going to save If we shift
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  Speaker 2: the goalpost from sixty five to sixty seven.
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  Speaker 3: You'd shift you'd be earning a lot more back than
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  Speaker 3: you would be by making some changes to the likes
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  Speaker 3: of the student allowance, student loans and fees free that
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  Speaker 3: came through it.
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  Speaker 2: I haven't finished there. I would be doing a lot
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  Speaker 2: more than that. I'd be taking away that third year
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  Speaker 2: free quickly. That should be an easy hit. I don't
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  Speaker 2: even understand why they're not doing that fast. I'd do that.
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  Speaker 2: Then I'd take away the winter energy payment, because then
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  Speaker 2: at least you're peeling a little bit a bit of
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  Speaker 2: something away from the pensioners. But also then I'd start
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  Speaker 2: having a really good look at that working for families,
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  Speaker 2: which is just basically blown out, hasn't it. And in there,
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  Speaker 2: do you not think that you could save as much
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  Speaker 2: as if you take away those two years off pensioners.
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  Speaker 3: Well, I think of you if you took the two
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  Speaker 3: years off pension, if if you changed that age. And
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  Speaker 3: that's more specifically, because we know that people are spending
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  Speaker 3: an extra nearly five years on super than they were before. Yes,
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  Speaker 3: put it this way, if I was telling you that
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  Speaker 3: people were spending five extra years on jobs seeking benefits,
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  Speaker 3: you'll be absolutely beside yourself with the level of benefit
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  Speaker 3: dependency there. And that's what we're doing with Super. So
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  Speaker 3: I guess my proposal here is, if you're wanting to
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  Speaker 3: sort of figure out where you can claw back some
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  Speaker 3: of the money that isn't currently sort of targeted to
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  Speaker 3: the people that need it the most, New Zealand Super
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  Speaker 3: is far and away the area that you need to
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  Speaker 3: address first. Yes, you might be willing to address those
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  Speaker 3: other areas too, but you're talking cents on the dollar
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  Speaker 3: compared to what you're doing. If you change New Zealand Super,
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  Speaker 3: we literally are getting to the point heither where we
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  Speaker 3: will be spending one in five dollars that government spends
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  Speaker 3: will be on New Zealand Super in about a decade's time.
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  Speaker 3: So all the other stuff is pipsqueaks.
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  Speaker 2: Are you means testing it or are you just going
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  Speaker 2: sixty five to sixty seven for everybody?
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  Speaker 3: I would probably look at doing both. I mean, the
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  Speaker 3: sixty five to sixty seven shift is purely because life
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  Speaker 3: expectancy has increased from where it was in the nineteen
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  Speaker 3: nineties when we last change give a brand.
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  Speaker 2: I'm going to come back to you on this and
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  Speaker 2: I'm say it's very easy for you to say this
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  Speaker 2: because you sit on your butt all day doing economics, right,
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  Speaker 2: You try telling this to a builder who's carrying gigantic
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  Speaker 2: pieces of timber since he was seventeen eighteen years old.
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  Speaker 2: His body is broken by sixty never mind sixty five,
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  Speaker 2: never mind six txty seven.
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  Speaker 3: Then you address that in the right way through targeting,
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  Speaker 3: not by providing it to everyone. Because while I might
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  Speaker 3: agree with you, there around the likes of construction workers
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  Speaker 3: and whom and my father is one of them. You
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  Speaker 3: look at the number of people there that are still
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  Speaker 3: getting paid plus when they're over the age of sixty five,
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  Speaker 3: that are also doing jobs just like mine.
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  Speaker 2: And I've got another one for you. Again, when I'm.
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  Speaker 3: Thinking here that you would argue, I expect that looking
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  Speaker 3: at that same example, if you had Brad age sixty
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  Speaker 3: seven currently doing his economists role, are you wanting to
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  Speaker 3: give him New Zealand Super? Can you really support that? Brad?
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  Speaker 2: I think that you've paid a lot in your taxes
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  Speaker 2: and you deserve to be looked after, and if you
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  Speaker 2: don't want to work at sixty five, y're entitled to.
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  Speaker 3: But that's the difference here because I haven't actually contributed
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  Speaker 3: anything through to my future New Zealand Super payments. All
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  Speaker 3: I'm doing at the moment as a taxpayer under thirty
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  Speaker 3: is I'm currently paying for the super for those who
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  Speaker 3: are currently retired. There is no pre payment here of
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  Speaker 3: New Zealand Super apart from a bit of an adjustment
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  Speaker 3: in the Color Fund. But put it this way for you,
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  Speaker 3: hither when you're not currently retired, have not prepaid anything.
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  Speaker 3: Take it ow you not? Okay?
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  Speaker 2: I totally accept that argument. I mean that emotionally they do.
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  Speaker 2: But I understand what you're saying.
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  Speaker 3: But what about this?
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  Speaker 2: Okay, So if we were to adjust sixty five to
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  Speaker 2: sixty seven, when are we doing it?
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  Speaker 3: I would start to increase it by anywhere from three
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  Speaker 3: to six months almost immediately.
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  Speaker 2: No, but you're you. You don't get to call the shots.
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  Speaker 2: Let's be realistic about this. When are the politicians going
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  Speaker 2: to do it? When did Bill.
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  Speaker 3: English Shake'll be alive? I don't know if I'll still
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  Speaker 3: be alive when the politicians okay, move. I mean it
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  Speaker 3: seems argument.
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  Speaker 2: What you're arguing about is something that they will start
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  Speaker 2: signaling now for thirty years from now. Okay, Can we
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  Speaker 2: wait that long?
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  Speaker 3: Well? No, I don't think we can all start with.
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  Speaker 2: The tertiary stuff immediately and then we'll pencil that and
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  Speaker 2: for later down the track.
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  Speaker 3: But here are you really saying though that you think
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  Speaker 3: that the country is totally on board with changing things
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  Speaker 3: up and making it harder for young people. But we
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  Speaker 3: shouldn't be able to touch what older people. Yes, that
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  Speaker 3: is wrong, that is absolutely wrong. And if that's the
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  Speaker 3: country that we're living, I'm really said and worried for
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  Speaker 3: our future.
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  Speaker 2: Oh no, have you did you not learn to respect
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  Speaker 2: your elders?
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  Speaker 3: How don't we learn to respect my elders? But I
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  Speaker 3: also learned that respect has to be earned, not just given.
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  Speaker 3: And I think that even those who are over sixty
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  Speaker 3: five must recognize at this point that just getting paid
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  Speaker 3: money for every single over sixty five year old just
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  Speaker 3: by simply existing is not the best way to spend
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  Speaker 3: twenty three billion dollars, the largest single piece of spending
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  Speaker 3: outside of the healthcare system.
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  Speaker 2: Brad, I love your enthusiasm. Thank you for talking me
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  Speaker 2: through it. You've given me a lot to think about.
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  Speaker 2: I'm going to go away and think about it, and
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  Speaker 2: I hope you'll think about some of the stuff, maybe
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  Speaker 2: some of the stuff I said to you. Brad Olson,
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  Speaker 2: principal economist at Infmetrics.
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