Governments have a responsibility to face the bigger, longer-term issues for New Zealand.
Already this year we have made significant announcements in areas like policing, rolling out ultra-fast broadband to another 150 towns, improving freshwater quality, and tightening up on the tax obligations of multinational corporations.
Last week the Prime Minister addressed another of these long-term issues when he announced how we will tackle the rising cost of New Zealand Superannuation.
Improvements in healthcare and lifestyle mean we are living and working longer today than we ever have.
Good health is good news. It means we can enjoy life more and remain active in the workforce and the community for longer. However, longer life does drive up the cost of Super.
By international standards, NZ Super remains relatively affordable. Funding superannuation presently costs about 5 per cent of GDP compared to 9 per cent across OECD countries. However, the cost in New Zealand is expected to rise to 8.4 per cent by 2060, a significant increase on today’s cost.
That level of spending on superannuation is affordable if we tighten spending in other areas. But we don’t want future governments to be forced to cut spending on healthcare and education, or to put up taxes. That’s why we have proposed progressively increasing the age of eligibility for NZ Super to 67, starting in 20 years’ time.
With the average life expectancy increasing by about 1.3 years each decade, someone who retires at age 67 in 2040 is likely to receive NZ Super for longer than someone who retires at age 65 today.
This policy will more fairly spread the costs and benefits of New Zealand Super between generations, ensure the scheme remains affordable into the future, and give people time to adjust.
We will also change the residency requirement for eligibility for Super from 10 years to 20 years. It will apply to people arriving in New Zealand after the legislation is passed.
Facing the longer term issues is not necessarily the most popular thing to do, but it’s responsible and necessary. Doing so early means we give New Zealanders a long lead time to help them plan for their retirement.
Member of Parliament for Botany