More Effective Than A Molotov Cocktail: Elderly New Zealanders have used their votes to keep NZ Superannuation safe from the neoliberals who would destroy it. Rather than castigating them for preserving this last great remnant of universal welfare provision, young New Zealanders should learn from their example.
IT WAS THE LARGEST STUDENT DEMONSTRATION Dunedin had ever
seen. Close to 10,000 students had marched the length of George Street and half
of Princes Street to completely fill the Exchange. I was just one of many
speakers on that overcast day in the winter of 1989. Most of these chose to
declare their opposition to the fourth Labour Government’s imposition of
student fees in as few words as possible – but not me.
Speaking on behalf of the NewLabour Party, I felt obliged to
spell out the realities of tertiary education funding. I told them that they
could have free education or low taxes – but they could not have both. If the
wealthy refused to pay higher taxes, then students would have to pay higher
fees. If the middle class (i.e. their family) was serious about keeping young
people (i.e. themselves) out of debt, then they would have to vote for a party
that was willing to restore a genuinely progressive taxation system.
They booed.
My party comrades were less than impressed. But, the
experience taught me something even more important than “never try to reason
with a crowd”, I learned that Rogernomics had unlocked something ugly and
selfish in older and younger middle class New Zealanders alike. In the minds of
those 10,000 students – the people we would come to know as “Generation X” – a
free tertiary education was simply their entitlement. The notion that, by
accepting this entitlement, they had enmeshed themselves in a complex system of
reciprocal rights and obligations made them very angry indeed.
For the fifty years that followed the Great Depression and
World War II the idea that older New Zealanders could somehow be absolved of
their responsibilities toward younger New Zealanders, and vice versa, would
have been regarded as absurd. People simply accepted that living through
periods of paying taxes to support others, as well as periods when the taxes of
others would support them, was what made a fair and decent society possible.
Society benefited enormously from a well-educated and culturally enlivened
citizenry. It also benefited enormously by making sure that every older citizen
could live in security and dignity.
Through a process of trial and error, spanning many decades,
New Zealand discovered that the best way to preserve the security and dignity
of its older citizens was to pay them what amounted to a universal basic
income. Regardless of gender, ethnicity, sexuality or social class, every New
Zealander over the age of 65 is guaranteed a modest income from the state. NZ
Superannuation has played a huge role in reducing the incidence of poverty
among elderly New Zealanders. Its universality makes it both cost effective and
sustainable. Providing the progressivity of this country’s tax system is
restored, it is also entirely affordable.
Not surprisingly, those already in receipt of, or about to
receive, NZ Superannuation are determined to preserve it. Politicians have been
taught, over successive elections, that messing around (or even threatening to
mess around) with “Super” is a sure-fire way to lose, or be kept out of,
office. Elderly New Zealanders have used their votes to great effect in this
regard. Rather than castigating them for doing so, young New Zealanders should
learn from their example.
Because it’s simply not the case that older New Zealanders
have devised something special for their own benefit at the expense of younger,
more deserving, Kiwis. On the contrary, NZ Superannuation is the sole surviving
significant remnant of the universal social welfare system that successive New
Zealand governments have been attempting to destroy ever since Roger Douglas
kicked off the neoliberal “revolution” in 1984. The only reason “Super” has
survived is because , election after election, hundreds-of-thousands of its
supporters have made their way to the ballot-box and voted to keep it.
Rather than urging young people to riot against the cost of
the NZ Superannuation system (and thereby achieve the neoliberals’ objectives
for them) those in search of a more just society should be spelling out to
their contemporaries the clearest political lesson of the past 30 years: that
if you want a fair and decent society, then don’t boo those who advocate for a
system of reciprocal rights and obligations – vote for them.
This essay was
originally posted on The Daily Blog
of Monday, 16 January 2017.
"I learned that Rogernomics had unlocked something ugly and selfish in older and younger middle class New Zealanders alike."
ReplyDeleteUnlocked is certainly the right word. It was always there, just hidden. It came out after a few drinks in the pub often. Or when somebody thought you were of similar mind, and could therefore be trusted. It's now quite respectable.
I was on that protest march.
ReplyDeleteCertainly, it seemed that NZ was at an historical turning point.
I thought at the time, and do from time to time since, that adopting right-wing extremist neo-liberal economic policies (ie Chicago School: Friedman et al) was an odd fit and departure for NZ given our political and economic history up to that point.
Even more odd that intellectual slaves to neo-liberalism ie Phil Goff are still around.
Wholly agree, Chris.
ReplyDeleteOn the whole, NZ Super works well simply because it's universal and, hence, cheap and easy to administer.
There's a respectable argument for raising the age of accessibility but not for sacrificing universality and thus making the system more expensive, more oppressively bureaucratic, more intrusive into the lives of older New Zealanders and more prone to the encouragement of economically perverse behaviour.
But there may well be an even better case for keeping things as they are, as a building block for a new approach to community, fit for a work-short future.
And, obviously, whichever approach we take will require helping people to save and persuading them to do so.
Excellent article (as usual) Thank you Chris.
ReplyDeleteVictor
ReplyDeleteThis saving for the future thing. With the present economic system the idea is doubtful.
Consumer spending is a NZ industry so the theory is that slowing it will cause closures and layoffs and less GST, that flat tax of 15% hitting everybody or nearly all lower echelons.
That is one paradox - of thrift. https://en.wikipedia.org/wiki/Paradox_of_thrift
But there is another paradox of saving based on real figures and facts.
When things are going well and people say it is a good time to save they actually save less (and presumably are tempted to afford more things).
When it is a bad time to save because of uncertainties and economic downturn, they don't feel comfortable to spend and save more. Good graphs here that seem to affirm the idea.
http://www.economicshelp.org/blog/6548/uncategorized/the-paradox-of-saving/
Then there is the way that pots of dosh from companies under the control of the wealthy or superannuation investment attracts sticky fingers of government, or if as part of a corporate's salary package, the attentions of the owner. Then the idea of people taking over their financials for the later part of their life, well they can have nothing if the government rearranges the country's finances or there is a world wide crash which wipes out all their saved credits.
Tycoon behaviour by media moguls:
Quite interesting to read the bluster of Conrad Black of Canada.
https://thetyee.ca/Mediacheck/2012/08/09/Conrad-Black-Crook/
Robert Maxwell:
His American acquisitions were a crushing debt burden. He had rifled the entire pension funds of Maxwell Communications to try to ease that debt burden, and he mortgaged virtually all his wealth on a huge gamble with fate.
https://www.theguardian.com/media/2003/nov/24/mondaymediasection6
Rupert Murdoch:
$100 million lost in an investment in a blood testing company.
http://www.vanityfair.com/news/2016/11/theranos-lawsuit-investors-fraud-allegations
Then there is investing in a home for one's retirement and finding it is leaky. There is a need to save but anyone touting that as sufficient to provide for a living in their old age has rosey coloured specs with blank lenses. And putting the age up to 67 is a move in the wrong direction. Make it 60 with a lesser payout but with side benefits, health care, transport concessions, for those who want it and then let them earn some more to give well being. Put the rate up when they get to 65, and get a useful amount of volunteer work and support work for so many hours a year. There could be jobs in the horticultural seasons which would cover all the requirements with nothing else needed for the rest of the year. Flexible would be the approach, but give as well as take would be the motto.
Hi Chris
ReplyDeleteTo ameliorate the envy NZ Super should be paid out at an age reducing by 5 years per passing year for the next 9 years.
It should be paid directly from the reserve bank out of fiat money instead of buying govt bonds with fiat money.
I suspect that if you had been able to talk to those students in private, or in groups small enough to allow for discourse, that there would have been widespread agreement and understanding among them of the need to cover education costs with taxation. I would weight the"never try to reason with a crowd" fairly heavily there, esp. while seeming to argue against what they had all turned out to demand.
Good on you for speaking the truth though , but that instinctive forthright honesty is probably why your political career was short.
Cheers David J S
I think the young people of today would be quite as enthusiastic about NZ Super Fund savings as I was 60 years ago having my 7.5(?)% of wages deducted for payment into the Universal Super Fund for NZ Super from age 65.
ReplyDeleteWell, the Fund was not properly "invested" and ended up as all public debt without any tangible assets apart from taxpayer obligations to pay - and ceased to exist under Muldoon.
However, the lesson has been learnt, our current NZSF is invested properly in tangible assets ownership or construction, and if our resumed contributions will be allocated to Personal Accounts - PAs - proportionally to taxes paid, our current youths might be again as happy with it as we were 60 years ago, because that would keep also their NZ Super sustainable from age 65, and even better:
PAs could be made available for investment in 1st home ownership (together with Kiwi Saver), and would belong to their owners' estates in the case of death before having been all consumed by their owners' NZ Super.
Phil Goff this morning talking about a regional fuel tax which he said could be from 5c to 15c a litre. His scale of cost going as high as 15c per litre won't impress the strugglers and those forced to distant suburbs from their work. It's modern behaviour to hurt the poor and make them pay an impost like a flat tax while announcing it is to make improvements that will benefit all. Those to whom every 50c counts as a significant amount of money wince at this sort of extra charge. Not everyone can access public transport, and it is crowded already.
ReplyDeleteIf Goff said that they would start off with 5c a litre, then put up the fuel tax in increments after five years when Auckland had better public and private mass transport, and perhaps feeder taxi routes picking up regular passengers and taking them to transport hubs at a shared low rate, that might be acceptable. I wonder if he and his advisors are
sensitive enough to the real needs of the low to middle income Aucklanders.
greywarbler
ReplyDeleteI agree that that if we save too much and stop spending, the economy loses its bouyancy.
Hence the need to encourage saving in institutions, such as a sovereign wealth fund, which can themselves help keep the economy bouyant, whilst also contributing towards a range of other desirable economic outcomes.
I also agree that most forms of saving currently available to New Zealanders are either a waste of space, a con or frought with all manner of non-obvious risk.
BTW I sometimes think I could write a book on how to lose money, having myself experienced a leaky home.
Where I disagree with you would be over making Super a two-tier operation and requiring some sort of community service or other activity from recipients.
Whatever the age of eligibility, Super needs to be standardised, universal and unconditional. That way, you keep it cheap and efficient to operate. And you also make it humane and non-intrusive into the lives of those benefiting.
As people get older and experience health issues of one sort or another, the last thing they want is the worry that some bureaucrat is snooping into their affairs and is going to stop or reduce their income because they haven't put in enough hours of "volunteering".
As to the age of eligibility, I really do have an open mind, just so long as universality and non-conditionality are part of the mix and just so long as its affordable. And keeping things simple seems to me to be part of the key to affordability.
If it were possible, I'd like to see UBI adopted, but only for those over the age of, say, thirty-five, as I think it's important for everyone to experience the discipline of work at some point in their life.
But I'll have to leave it to those wiser than myself to work out whether this would indeed be affordable.
Grey and Victor
ReplyDeleteForced savings as in Kiwi saver, Super fund and ACC are not really savings at all. They are forced investment in someone else's speculation enterprise, and sooner or later it is always lost in some financial upheaval in the timeframe of a lifetime working.
At the same time Govt is forcing the population to so invest ,it borrows up to the eyeballs from the same pool of investment funds and bankers for it's spending needs. The system is just set up to profit the manipulators of our wealth to take profit from both ends while transferring risk to the public and small savers.
The alternative of storing the savings in a bank at interest (they lend it out anyway ) historically , is eaten up by inflation. Such a scheme my mother had to contribute to when she was a dental nurse during the depression, took money earned that she desperately needed at the time , and gave it back 40yrs later when she needed it no longer ,and by which time it was almost worthless at the the cost of living anyway. And that will always be the case. That far in the future is much too far ,esp with the rate everything is changing now.
The sensible , honest thing for govt to do is to own up to the fact that forced savings schemes are a tax, and leaving the money shuffling sector right out of the equation, and using the extra tax revenue for current needs, including social welfare , instead of borrowing.
In imagining the motivations of a population to engage in socially/economically productive activity ,if a UBI meant that survival did not require it , I think people should imagine what they themselves would do with their time rather than imagine what other unknown, but presumably lazier people would do. Then everyone would be in favour of UBI except the Banks.
Cheers David J S