Opposition leader Judith Collins said the country should at least “talk about” raising the age of superannuation eligibility to address a trillion-dollar tidal wave of debt projected by Treasury.
But Prime Minister Jacinda Ardern isn’t keen – she’s sticking to her decision to rule-out raising the superannuation age of eligibility from 65. Labour has also had a policy of raising the eligibility age, but it was overturned before Ardern assumed the leadership.
“This is, in my view, something we need to give people certainty over, so that’s why I have said that while I am Prime Minister we won’t be changing the age,” Ardern said.
Collins and Ardern were responding to a draft Treasury paper on the government’s finances in the long-term, which looks at the government books out to 2061.
The rising cost of superannuation and healthcare for an aging population will see government debt balloon to about $2.5 trillion, or 177.3 per cent of GDP. Currently, government debt is just over 30 per cent of GDP.
Collins noted that National had previously had a policy of raising the superannuation age of eligibility, although she wouldn’t commit to resuscitating that policy on Tuesday.
“We have previously said we would look to actually extend out the age at which people become eligible – certainly have that conversation about it,” Collins said.
“This is not something we would announce today because it’s something we have to have a whole plan on, which we’re working on,” Collins said.
But Collins acknowledged the idea of talking about raising the super age was unpopular.
“People don’t want to particularly talk about that one but it is something we need to talk about,” she said.
Ardern said that by maintaining contributions to the NZ Super Fund, her government could give “long-term certainty to New Zealand”.
Treasury thinks that by 2061, the Super Fund will cover about 6.6 per cent of total net superannuation expenses, smoothing its cost over a long period.
The rest would be covered by taxes. National suspended contributions to the fund under the last government, and proposed to suspend them again if it won the 2020 election.
Even factoring the Super Fund into account, Treasury suggested the rising cost of providing super was enough to consider ideas like raising the age of eligibility to 67 or indexing superannuation in line with inflation rather than wages, which would see the cost of superannuation diminish over time.
Treasury also suggested the Government look at things like raising taxes, and rolling out a capital gains tax to plug the spending hole.
But a capital gains tax has also been ruled-out by Ardern.
“I’m not going to get into ruling in or out every single policy under the sun,” Ardern said when asked about the capital gains tax on Tuesday.
Collins said that the focus on controlling debt levels had to come from growing the economy and ensuring the government didn’t waste money.
“It’s very important the government doesn’t waste money,” Collins said.
Treasury’s forecasts take economic growth into account. The economy grows to about $1.4 trillion in 2061, up from $334.4 billion today.
The problem is that debt rises much faster.
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