Responsible fiscal management benefits all

National sets impressive record of achievements 

Kanwaljit Singh Bakshi 

The National-led government was voted to lead New Zealand at a time when the world was in the midst of a financial crisis.

Since returning to government in November 2008, we have, under the leadership of our Finance Minister and now Prime Minister Bill English, proved to New Zealanders that we have the will and the ability to act in the best interests of New Zealand and New Zealanders.

Great initiatives

We have also demonstrated that we are willing to take responsibility and face bigger and longer-term issues affecting us.

This responsibility and our initiative towards tackling bigger, longer term issues is already visible in significant announcements made by us this year.

These include investing in better policing, improving freshwater quality, rolling out ultra-fast broadband to another 150 towns, and tightening up on the tax obligations of multinational corporations.

Increasing life-expectancy

The New Zealand Superannuation is another good example.

Improvements in healthcare and lifestyle mean that we are living longer today than we have ever in the past.

New Zealanders’ life expectancy has increased by 12 years in the last 60 years, including a four-year increase since 2001 when the retirement age became 65.

This means someone qualifying for New Zealand Super today is expected to live another 21 years.

By 2037, that number is forecast to rise to more than 23 years.

Older New Zealanders are also working more. Good health is good news. It means that we can enjoy life more and remain active in the workforce and the community for longer. However, longer life drive up the cost of New Zealand Super.

By international standards, New Zealand Super remains relatively affordable.

Funding superannuation presently costs about 5% of the Gross Domestic Product (GDP). This compares with an average of 9% across OECD countries.

However, the cost in New Zealand is expected to rise to 8.4% of GDP by 2060, a significant increase on today’s cost.

Meeting challenges

That level of spending on superannuation is affordable if we constrain spending on other areas. But we do not have to cut spending on healthcare and education, or to put up taxes.

That is why the government intends to progressively increase the age of eligibility for New Zealand Super to 67, starting in 20 years’ time.

The changes to Super include a lift in the residency requirement for eligibility for New Zealand Super from 10 years (with 5 years after age 50) to 20 years (retaining the 5 years after 50 provision).

The change will apply to people arriving in New Zealand after the legislation is passed. Those who have residency or citizenship before the legislation comes into effect will not be affected.

Lifting eligibility

The Retirement Commissioner has recommended increasing this residency requirement to 25 years. The government settled on 20 years as a fair and appropriate requirement.

It is an issue of fairness – with those who have not made as long a contribution to New Zealand as their working lives, receiving the same support (after living here for only 10 years) as people who have paid taxes throughout their working life.

A person born or raised in New Zealand will usually start their working life when they are 20 years old.

If we are to compare this with a new migrant who arrives here later in their life and is entitled to the same superannuation terms, it clearly raises issues of fairness as well as extra burden on the New Zealand taxpayers.

The Scheme elsewhere

Superannuation legislation in other OECD countries is far more stringent.

New Zealand’s superannuation rates are amongst the best in the world.

If we want this to continue, we must adapt to changing times.

Legislation to make changes to Super will be introduced next year.

The New Zealand Super changes are about striking the right balance and making it fair to both present and future generations at a time when there is increasing pressure on government finances.

National remains committed to the universal nature of New Zealand Super with no means or asset testing. In addition, we remain committed to the Super being indexed at 66% of the average weekly wage.

KiwiSaver will continue to be available to savers even after they reach 65 years.

This government has a strong track record of supporting our older citizens – since 2008, weekly payments to super-annuitants have increased by 35% after tax, while inflation has increased by 14%.

Kanwaljit Singh Bakshi has been a Member of Parliament on National List since November 2008. He currently holds additional charge as Permanent Private Secretary to the Police Minister and as Chairman, Parliament Select Committee on Law and Order.

Photo Caption:

National Party Leader and Prime Minister Bill English with (from left) National MPs Jami-Lee Ross and Kanwaljit Singh Bakshi, joined by Ashok Kochhar.

(Picture by Creative Eye Photography)

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