Tuesday, 7 March 2017

Abandoning Key’s Pledge: An Act Of Astonishing Political Folly.

Cunning Plan Or Suicide Note: The scale of English’s political folly is astonishing. His refusal to honour Key’s pledge on NZ Superannuation has front-footed the very political combination that National should be doing all it can to destabilise: Labour, NZ First and the Greens.
 
WE’LL PROBABLY NEVER KNOW whether yesterday’s announcement on NZ Superannuation was carefully planned, or simply inept political improvisation. Either way, it is highly likely that Bill English has just cost National the 2017 General Election.
 
As if high-interest student loans and unaffordable houses were not intergenerational injustice enough for Generation X, a Baby Boomer Prime Minister has just advanced their retirement age from 65 to 67.
 
For older New Zealanders, English’s announcement has stirred-up bitter memories. Fears that John Key’s pledge to leave NZ Super alone had put to bed for nine years have been reawakened.
 
Very early on in his career as leader of the National Opposition, John Key realised that he and his party were vulnerable on the superannuation issue. In the bluntest terms, he understood that, in the minds of most older voters, his party had “previous form”.
 
Too many of them remembered Jim Bolger’s “no ifs, no buts, no maybes” promise to restore NZ Super to its former universal, non-means-tested and un-surcharged status. The Bolger government’s subsequent promise-breaking on NZ Super inflicted huge damage on National’s brand.
 
It was the making of NZ First.
 
Among the many “To-Do” items confronting Key in the run-up to the 2008 election were, firstly: pushing Winston Peters and his party out of Parliament; and, secondly: eliminating NZ Super as a negative issue for National.
 
Strategically, these two objectives were inextricably intertwined. If Key was to secure the required ideological head-room for his new “Labour-lite” government, then Winston Peters’ voters would have to become John Key’s voters. A National government obligated to Peters and NZ First would make the John Key = National, National = John Key equation impossible. If centre-Right New Zealanders were to repose their faith and trust in Key’s “Everyman” brand, then Peters would have to go.
 
Key’s pledge: That he would resign as Prime Minister before he would countenance any changes to NZ Super; was his inspired tactical solution to his own, and National’s, double-headed strategic problem.
 
As it became increasingly certain that Helen Clark’s government would fall, and the National/Act assault on Peters reached its crescendo, Key’s pledge encouraged a crucial fraction of Peters’ followers to believe that their damaged champion could be abandoned safely. Henceforth, that “Nice Mr Key” would be there, right at the top, to look after them.
 
It was a definite “twofer” for National.
 
Clark had gone to considerable lengths to look after New Zealand’s older voters and ensure as many as possible remained in Labour’s column. Unfortunately, her support for Sue Bradford’s anti-smacking bill had fatally undermined older voters’ trust and confidence in the Clark-led Labour Party’s values.
 
Ordinarily, that would have prompted these voters to shift from Labour to NZ First. Not this time. Peters’ “disgrace” and Key’s unequivocal pledge had laid down a royal road to National as the pragmatic custodian of “Mainstream New Zealand’s” core values. They defected in droves.
 
All of which makes English’s decision to advance the age of eligibility by two years electorally incomprehensible. All he had to do to keep National’s elderly supporters on side was to re-confirm Key’s pledge. ‘No change to NZ Super’ was the simple and straightforward formula for removing the issue from the 2017 election agenda.
 
So, why didn’t he do it?
 
The critics of NZ Super (which, unfortunately, includes the Retirement Commissioner, Diane Maxwell) will do their best to paint English’s decision as a brave attempt to prevent New Zealand Superannuation from becoming “unsustainable”.
 
But English’s past pronouncements make it clear that he does not believe the scheme is unsustainable. Immigration flows and the over-65-year-olds remaining in the workforce for longer will take NZ Super over the Baby-Boom hump quite comfortably – after which the demographic stresses will reduce significantly.
 
The only explanation that makes any sense is that English sees NZ Super as the last remnant of the welfare state’s universalist heritage – and he hates it. His whole “social investment” approach to state support reflects his determination to substitute “tightly-targeted” services for the demonstrably more efficient and cost-effective policies of universal entitlement.
 
In other words, English has allowed ideological extremism to undermine his predecessor’s phenomenally successful pragmatism.
 
All that Little and Peters need to do now is loudly recommit themselves to honouring Key’s pledge. Not only will this reassure older voters, but it will also incentivise younger New Zealanders to get out and vote. After all, if National can advance the age of eligibility in 2017, what’s to stop it introducing a means test in 2018? Or changing the formula for calculating the pension’s value in 2019?
 
The scale of English’s political folly is astonishing. His refusal to honour Key’s pledge has front-footed the very political combination that National should be doing all it can to destabilise: Labour, NZ First and the Greens.
 
The proud defenders of NZ Superannuation.
 
This essay was originally published in The Press of Tuesday, 7 March 2017.

25 comments:

mikesh said...

Perhaps we'll see a leadership coup in the near future.

Unknown said...

Im 65 soon and itching to quit work. If you think driving a tour bus in the New New Zealand with Old New Zealand renumeration is fun you are sadly mistaken.
A German told me German drivers would have to quit at 65, although (apparently) they have better pension schemes being a wealthier country. In our industry some work untill they are 80.

peter petterson said...

English's decision was very strange. Nothing brave about it at all. Labour needs to set its own agenda and get out there and stress what New Zealand's priorities are: housing, employment, education, immigration, child poverty etc

Guerilla Surgeon said...

I'd have called this political suicide, unless the government can make a very strong case and communicate it to voters. Let's face it, old people tend to vote.

Jens Meder said...

This is the opportunity for Labour to come up with a stronger economic policy than National's freely consumable tax reductions, because resuming NZ Super Fund contributions into a PERMANENT NZ Super Fund to keep the NZ Super entitlement age sustainable at 65 also for our longer living descendants after the baby boomers -

will convert our NZ Super sustainability issue from a burden into a stronger economic "growth engine" (the Singapore way) than what can be achieved by some capitalists investing their tax reductions in new wealth creation, instead of consuming them on luxuries possibly overseas, or just buying some more personal assets, of which they got plenty already.

Charles E said...

An act of excellent leadership.
Everybody knows it has to go up. So:

It will get plenty of votes from those who vote most: the very high proportion of older people, by which I mean over 40 vote, and have children. And at least half the youngsters are sensible and not selfish and lazy so will approve.
So for the older voters, one it gets over the worry that Labour previously wanted to raise it in about 10 years time so could flip flop again. And two their childrens' taxes to pay for it will be a little less.

And it sets the agenda and benchmark for debating it so the starting point isn't some daft and selfish idea about giving some group special early access, like manual workers or people with Polynesian blood. If you do that you'd have to give all men it earlier that women too. The list would grow and be a mess.... means testing ....
No, National says keep it universal & simple, as is, and years from now raise it two years as by then everyone will be living more than two years more so we all get it on average the same number of years as now.

And it is a play for Peters' support. He will bump up the immigrant qualification to 25 years as a condition and English will agree. A done deal.
That is what pisses you and the left off eh.

greywarbler said...

That image of English shows him looking tired and strained, though he still has his hair he is beginning to look worse for wear, worn out, has-been, time for someone else from the Treasury Benches to step up or some Lady Godiva ride in and dazzle us with her beautiful hair and teeth.

Being at base, and they are pretty base, the National Party - not at all being the Irrational Party as a conservative farmers party follow good rural practices and inspect glossiness of coat, brightness of eye, good teeth and straight fetlocks, performance of jumping over airport barriers etc when they look over their coming stock for quality and health.

AB said...

"The only explanation that makes any sense is that English sees NZ Super as the last remnant of the welfare state’s universalist heritage – and he hates it."
Nailed it in one sentence.
Universalism of benefits, when combined with a properly progressive income tax that abates those benefits at higher incomes, is just so efficient. Aren't we supposed to be business-like and love efficiency?
And it is also a driver towards the enormous social, economic and psychological benefits of greater equality. It is this part that English hates. So he will be prepared to tolerate Byzantine complexity and inefficiency in his "social investment" mirage in order to prevent greater equality.

Guerilla Surgeon said...

"An act of excellent leadership."
No it isn't.

"Everybody knows it has to go up."
No they don't.

"It will get plenty of votes from those who vote most: the very high proportion of older people"
No it won't.

"like manual workers "
There speaks someone who has either not done manual work, or has only done it for a very short time.

"He will bump up the immigrant qualification to 25 years as a condition"
No he won't, Winston knows which side his bread is buttered on.

Well, Charles's assertions disposed of by more assertions, equally valid. I vaguely remember an old professor of mine saying If I remember rightly, that if the government had started preparing for this twenty or so years ago, it could easily be afforded. And of course there are summers claim it could easily be afforded now. But I guess it's a bit much to expect governments in this country to think long term. Labour's defunct superannuation scheme binned by Muldoon begins to look more and more attractive now doesn't it?

Charles E said...

I am 60 and healthy and fit. If I ask one of those serious website for life expectancy, from say the AMA I get 90+!
So I may have 25 years on National Party Super. Generous I reckon, so I shall make sure I spend it here well.

But I expect a similar 30 year old bloke like me (ie who isn't a fat drunken p smoker) probably will have a life expectancy of pushing 100.
So do you really think my grandchildren should support him for 35 years, plus free medical. Bugger off. Push the age up to 70 I reckon.

Victor said...

"The only explanation that makes any sense is that English sees NZ Super as the last remnant of the welfare state’s universalist heritage – and he hates it."

Chris, unlike AB, I'm not so sure you've nailed it. Raising the age of eligibility would not detract from universalism. Means-testing, of course, would.....and would bring a host of additional ills in its wake.

English is, I suspect, trying to patch together a coalition of those who are already on Super or are likely to qualify for it soon PLUS those for whom retirement is a long way off and who, therefore, may not have thought about it as a personal goal.

To the former, he's offering the assurance of the continuance of the status quo, in, he would argue, a more sustainable form. To the latter, he's offering what they might well consider a blow for greater inter-generational equity, with (they might believe) more funding available for education, housing, health et al and/or lower taxes..

And there will be many an anxious grandparent for whom both these sets of arguments might have some resonance.

Full marks, then, to Little and Adhern for their speedy and lucid characterisation of English's proposal as, actually, a blow against inter-generational equity. Suddenly, I'm rather impressed by Labour's leadership team.

Personally, I hope they are right and that Super is indeed still affordable at the current age of entitlement. In itself, it's by far the best system. If not, I'm convinced that raising the age of eligibility over time, whilst retaining universality, would be the least bad alternative.

But, to provide for the many (not just in manual trades) who, for health reasons, might then be unable to keep on working, I would cautiously suggest a broadening of ACC's criteria of eligibility. Not that I expect Mr English to agree with me over that.

Victor said...

AB

"Universalism of benefits, when combined with a properly progressive income tax that abates those benefits at higher incomes, is just so efficient. Aren't we supposed to be business-like and love efficiency?"

My previous post notwithstanding, I totally agree with you.

Anonymous said...

So the young who have student debt, low wages, poor job security, high cost tertiary study and almost impossible housing aspirations due to our countries neo liberal experiment now get to work two years longer too. Whilst those folk lucky enough to have lived there lives in the halcyon days of NZ (I know all wasn't bread and honey but you get the gist) sit in their now million dollar homes, having had their education largely paid for, having enjoyed secure employment which supported them to develop and grow on wages that allowed their wife to stay home and look after the kids. I don't understand why the young aren't rioting in the streets except maybe they are too busy working to pay their student debt (for which a trip overseas and a delay in repayment can see them arrested at the border).

Simon Cohen said...

Interestingly none of you have commented on the fact that this was Labour Party policy two years ago.And this is what prominent Labour MPs have said;

Here’s what Little has said recently:

“If there’s one thing that scares the bejeesus out of me, it’s the looming cost of superannuation. That’s a significant chunk of the Budget,”

And Jacinda Ardern in 2012:

In three years, superannuation will cost more than the entire education budget; preschool, primary, secondary and tertiary put together.

It will grow to be 20 times the cost of unemployment benefits. We need to ask if the universal age of super is set at the right place. But rather than tackle this big issue for the sake of future generations who want a home, a secure retirement and a country with a sound savings plan, they continue to target them and burden them with debt.

Politics can’t just be about making decisions that anger the least number of people possible, it has to be about doing the right thing. Labour’s view that superannuation should be lifted is one that we think needs to be phased in from 2020

Radio Live, 14 June 2012

Also various quotes by David Parker:

Finance spokesman David Parker said today that unless there were massive tax increases, it couldn’t be sustained in its present form.
Parker said he thought people largely understood raising the retirement age was a responsible policy.
“In two years spending on superannuation will cost more than putting our kids through school and university. That’s wrong. National’s refusal to address the retirement age is hurting our next generation.
Labour’s finance spokesperson David Parker says pension costs, which make up about half of all social spending, need to be addressed. “If you want an example of where fiscal responsibility starts that’s it – that is the biggest growing cost centre that is controllable for Government.”

So why does Chris think this announcement will cost National the next election.
Does he think :Labour will now disown its earlier position on National Super.
Surely this issue is so important it should be addressed in a bipartisan manner.

AB said...

Victor
"Chris, unlike AB, I'm not so sure you've nailed it. Raising the age of eligibility would not detract from universalism. Means-testing, of course, would.....and would bring a host of additional ills in its wake."

Yes - that is true. But if your ultimate desire is to dismantle the system because the principle of universality offends you, it's smarter to do it bit by bit. Perhaps start somewhere that is less contentious and then work up from there?

And an additional minor point - if the entitlement age gets too high then I think you have started to undermine its universality, as a number of people will die before receiving it, e.g if someone down the track decided to push it to 70.

Sanctuary said...

Watching Bill English, one is immediately reminded of the Peter principle that states "managers rise to the level of their incompetence" as applied to political high office. The gaffes Bill English has been making - hanging on to that incompetent fool Nick Smith, bungling his superannuation announcement, and revealing his prejudices against young New Zealand workers by labelling them lazy stoners as a justification to ethnically cleansing the workforce by importing pliant third world labour - show that he has been the beneficiary of the Peter principle not once, but twice in his political career. He was a disaster as a leader of the opposition in 2002, and it looks like he is becoming an even bigger disaster in his unelected elevation to the job of prime minister.

Nick J said...

The man (English) is no chameleon like Key, his true colours have always shown through. It cost him last time, it will cost him again.

chris73 said...

Pretty sure people said it was political suicide when John Key said before the election that there'd be a partial sell down of the power companies

I think, thanks in part to the announcements Labour has already made, that people do realise the retirement age has to rise so to me the big question is who is going to win the battle of the framing of the debate.

Comorant said...

As much as I would personally like to see the end of Bill and National. I can't see this as costing them the election.

They exempt the core of their voters and will happily drop it for Winston come negotiation time. Sort of like getting a free chip to trade away.

There is at least a strong argument that raising super is a prudent move. Playing into the perception that Bill is a safe pair of hands.

Sadly, Labour is all over the show. Little seems to have responded to the criticisms of being too similar to National with "Whatever National's stance is, we will be opposite". National is basically steering Labour's Policy. Leading Labour into all sorts of hypocrisy tangles and making Little look unimaginative and a follower.

Charles E said...

Simon has left the rest of you a bit silent eh.
Hypocrites now lead Labour. Cowards who clearly will do anything for a vote.
And for that matter you can have Peters. He's a snake.
If National continue to show a united, reasonable and responsible front they may just get 50% in September. Imagine that.

greywarbler said...

Naturally superannuation has to be attended to and disarmed. It is a device from the past, an old mine that might blow us all up any year soon.

The neo libs want to strip away everything that a modern, balanced country would provide with all its citizens in mind. Neo libs minds are on higher things, like growing piles of cash for them and growing debts and despair for the precariat with those in the middle class concentrating on clawing their way up to safety. But there is no safety in that but hey believe in it while you can.

They say that deserts used to be the food bowls of wherever. The remains of proud countries even civilisations litter the landscape and are good for gazing at by well-fed tourists. Trouble is that at asset stripping we have become super-efficient. Efficiency rules the day, leave no meat on those bones, no asset of the people unstripped, no saved credits not drawn. We are already gazing on the stones of our finish, where water used to run etc etc

We don't even understand how money operates, how it is created out of thin air, and runs on businessmens positive or negative feelings as they pass water in the early morning.

greywarbler said...

If the meaning of money is to raise capital to carry out some human endeavour, and wages are just to carry out the endeavour of living and participating in society, aren't superannuitants more fitting than the wealthy who sit on their stacks of essence of living and keep that elixir to themselves. The very rich are no longer wealth creators they are creatures of stone, pyramids to themselves, their own monument, legends in their own lifetimes.

Why not find the money to pay superannuitants, change the name of the payment from super, to promissory notes, which bind the recipients to taking their parts as wealth creators by spending and creating the ripple effect, the multiplier than enables wealth to be spread around to their community. These promissory notes would disappear if not spent and not be accepted outside their region. And there would be an extra payment of exchangeable currency of the usual sort for every volunteer hour the superman or woman put in to assisting their country in some agreed activity. It is bloody affordable, all that is needed is to step up and do it and make the system work and stop playing around with our society. Society will have to demand better politicians and better policies, and bean counters who really understand gardening and the living earth they and we all depend on.

Victor said...

If everyone voted according to their own perceived self-interest, then this could become a battle between, on the one side, the "silent generation", boomers and millenials (for many of whom, I suspect,the very thought of a subsidised old age is a sort of Shangri La and, hence, a waste of money) and, on the other side, Generation X.

But, of course, not everyone votes out of self interest. And not all age groups vote in equal numbers.

And, rightly or wrongly, some grandparents might see it as a choice between what's good for their Xer kids and what's good for their millenial grandchidren. The two may not be the same thing.

Either way (and despite my own preference for keeping things as is), I'm not sure English has backed a loser.

Victor said...

AB

"Yes - that is true. But if your ultimate desire is to dismantle the system because the principle of universality offends you, it's smarter to do it bit by bit. Perhaps start somewhere that is less contentious and then work up from there?"

You may be right in thinking that English is recommending X (slightly higher age of accessibility) because he really wants Y (means testing). But we have no recent, hard evidence for him wanting Y.

And your assumption is based on the notion that Y would be deemed less popular than X. I'm not sure that it would be.

peter petterson said...

What the hell is Steven Joyce up to?