Dangerous Generations?

Unforgiving Critic: At the core of Shamubeel Eaqub’s proposals is a puritanical belief that citizens have no entitlement, morally, to an income they haven’t saved for. And that NZ Superannuation – currently paid for out of the steady growth of the New Zealand economy – is a violation of intergenerational equity. OnTV3’s The Nation, he railed against the fact that “very wealthy people” continue to receive NZ Superannuation. 

ON SATURDAY (1/4/23) SHAMUBEEL EAQUB came out swinging against the Baby Boom Generation on TV3’s The Nation. The Gen-X economist was adamant that the New Zealanders born between 1946 and 1965 had guaranteed themselves a universal retirement income, which they were now enjoying, regardless of the economic impact on subsequent generations. Outraged that the Boomers, not having saved for their retirement, continue to live on “welfare”, Eaqub made it clear that he regarded NZ Superannuation as a form of intergenerational theft. It was unaffordable, unsustainable, and it had to stop.

Asked what he would recommend by way of addressing the vexed issue of retirement income, Eaqub proposed raising the age of eligibility for NZ Superannuation to 70 years-of-age, and subjecting every applicant to a means test. Writing on the same subject for Stuff back in 2018, Eaqub further suggested making Kiwisaver compulsory and dramatically increasing the contributions from employers and employees. He was also of the view that his proposed means-testing regime would need to: “test assets and would be a natural complement to a tax regime that taxes capital as well as income and spending.”

As the National Party were quick to point out in relation to Grant Robertson’s proposed social insurance scheme (now on hold by order of Chris Hipkins) the sharp increase in deductions from workers’ pay packets required to make Kiwisaver a viable alternative for NZ Superannuation will be experienced by most employees as just another tax. It is unclear from his Stuff article whether Eaqub’s proposed Capital Gains Tax will be applied to the family home. If that is the plan, however, then the impact on asset-rich/cash-poor retirees could be catastrophic.

At the core of Eaqub’s proposals is a puritanical belief that citizens have no entitlement, morally, to an income they haven’t saved for. And that NZ Superannuation – currently paid for out of the steady growth of the New Zealand economy – is a violation of intergenerational equity. On The Nation, he railed against the fact that “very wealthy people” continue to receive NZ Superannuation. In a world run by Shamubeel Eaqub, this outrage would, presumably, cease. “Very wealthy” people’s entitlement to “Super” would be means-tested into nothingness.

Radical stuff! But also a plan guaranteed to provoke an extreme political backlash if implemented. Indeed, so vociferous would the reaction to Eaqub’s proposals be that it is difficult to see them being introduced in any other circumstances than those arising out of a full-scale intergenerational war.

If that is what Eaqub wants, if his plan really amounts to nothing more than the meting out of what he and his generation consider a well-deserved generational punishment, then they will have singled themselves out as a very dangerous generation.

When, however, Eaqub’s argument is pulled apart, older New Zealanders may feel entirely justified in arriving at such a grim judgement. Take, for example, Eaqub’s claim that the universality of NZ Superannuation “makes the system simple to administer, but expensive.”

Expensive compared to what? The cost, of New Zealand’s universal basic income for the over-65s, measured as a percentage of GDP, is predicted to top-out at between 7-8 percent. But, that is the cost of the German pension scheme right now! What’s more, as New Zealand moves beyond its Peak-Boomer moment, and the generation dies out (as all generations do) then the cost of NZ Superannuation will fall.

It is at this point that the reckless quality of Eaqub’s argument becomes most apparent. As the Baby Boomers disappear into the historical shadows, the Generation Xers will start to view their retirement with a mixture of trepidation and horror. In their determination to punish the privileged and selfish Boomers, Gen-X politicians, inspired by the likes of Eaqub, will have replaced the generous universal pension of yesteryear with a means-tested grant that kicks-in only after they reach their seventieth birthday. Moreover, the Kiwisaver “nest-egg”, for which they have been required to defer so much personal and familial gratification throughout their working lives, will offer them a weekly payment barely equivalent to the purchasing power of their parents’ and grandparents’ Super!

To make matters worse, it turns out that Eaqub’s fingering of the Baby Boom Generation as the villains of his puritanical economic narrative for The Nation is just plain wrong.

More than 30 years ago, an academic by the name of David Thomson, wrote a book called Selfish Generations?: The Ageing Of New Zealand’s Welfare State. Born in 1953, Thomson is a fully-paid-up member of the Baby Boom Generation. Did that mean that his book was a sinister blueprint for the dispossession of the Boomers’ own children? Did it heck as like! In a fashion echoed uncannily by Eaqub, Thomson railed against his parents’ generation:

In New Zealand the big winners in this have been the ‘welfare generation’ – those born between about 1920 and 1945. Throughout their lives they will make contributions which cover only a fraction of their benefits. For their successors the reverse is true.

Eaqub’s fatal weakness is that, like so many economists, he is not particularly well-versed in his country’s recent history. Clearly, he has no idea that it was Baby Boomer politicians who did their best to rein-in the cost of retirement income support. Between 1990 and 2000, these efforts transformed the Super issue into an electorally devastating political football which ended up scoring own-goals against both major parties. It was, Eaqub seems not to grasp, Boomer politicians who made sure the retirement age rose from 60 to 65. Boomers, too, who set up the Superannuation Fund to ease the nation through its Peak Boomer period.

Eaqub is not, of course, alone in his generational ferocity. There are plenty of other Gen-X commentators who are happy to join in the Oedipal dance. If these characters spent as much time blaming the neoliberal order (put in place by individuals born far too early to be branded Baby Boomers) as they do to bad-mouthing their parent’s generation, then something considerably more positive than gratuitous age-baiting might ensue.

A more fruitful place to seek for inspiration than Eaqub’s arid blame-game is on the streets of Paris and many other French cities and towns. It is there that young Frenchmen and women are fighting running battles with riot police to protect the French retirement age of 62, and the state pensions that come with it. They do not begrudge their parents’ good fortune. On the contrary, they are fighting tooth-and-nail to ensure that it remains their good fortune as well.

Those Gen-Xers who thrilled to The Nation’s intergenerational blame-fest, should turn their attention, instead, to just how much Shamubeel Eaqub’s ruthless prescription on pensions, and that of France’s technocratic and neoliberal president, Emmanuel Macron (b.1977) have in common.

This essay was originally posted on the Interest.co.nz website on Monday, 3 April 2023.

Changing The Climate – One RNZ Broadcast At A Time.

Wise Words: “To retain its taxpayer-guaranteed revenue, RNZ must also retain its most precious commodity: public respect and support. That can be imperilled by poorly thought out judgements, including assuming that it should set the political climate.” - Pamela Stirling, Editor, NZ Listener.

THE LISTENER LONG AGO ceased to be a cultural talisman for progressive New Zealanders. Ever since the apparently indestructible Pamela Stirling took charge and transformed the magazine she’d once denounced as “the house journal of the Alliance” into the house journal of the National Party. Recently, however, a couple of sentences from “The sound and the fury”, the Listener editorial team’s assessment of the RNZ Concert debacle (22 February 2020) struck me as unusually perceptive.

“To retain its taxpayer-guaranteed revenue, RNZ must also retain its most precious commodity: public respect and support. That can be imperilled by poorly thought out judgements, including assuming that it should set the political climate.”

That climate-setting quip should have prompted a double-take from RNZ’s bosses. Its clear intention was to alert them (gently) to the fact that some of its key producers’ and editors’ more recent judgements have raised a few important eyebrows – and not in a good way. There is a growing feeling among those whose education was vouchsafed to them in the years before our universities became customer-driven businesses, that RNZ has taken up an ideological position at some distance beyond either its listeners’, or the general public’s, comfort zones.

A telling example of RNZ’s determination to set the political climate was broadcast on the public broadcaster’s Checkpoint programme of Wednesday, 26 February 2020, in which RNZ reporter, Nita Blake-Persen, secured prime placement for her story “NZ Super costs up as NZ retirees on $100k passes 30,000”.

It is difficult to assign any other motive for producing this sort of story than a desire to fan the flames of intergenerational warfare. Singling out high income-earners over 65 (whose annual contribution to the IRD, based on a minimum salary of $100,000 is a bracing $23,920!) was certainly inflammatory. Ms Blake-Persen’s analysis also hints strongly that the abandonment of the universalist principles underpinning NZ Superannuation may have to be accepted as unavoidable collateral damage in the aforesaid war between the generations.

More disconcerting, is what appears to be a lack of sensible editorial oversight of Ms Blake-Persen’s story. Having read her copy, did Checkpoint’s editors, Pip Keane and Catherine Walbridge, not warn Ms Blake-Persen to calculate the total tax contribution of the 31,048 New Zealand superannuitants earning more than $100,000, and then compare that figure to the $608 million paid out to them by way of NZ Superannuation? A pretty sensible precaution, I would have thought, given that if the 31,048 older Kiwis so provocatively singled-out by Ms Blake-Persen proved to be net contributors to the state’s coffers, then her whole story falls flat on its face.

Which is exactly what we discover when we subtract NZ Super payments totalling $608,000,000 from Income Tax payments of $717,600,000 (31,048 x $23,920). Far from being greedy Boomer leeches bleeding their hapless GenX offspring dry, these workers are contributing a net $134,668,160 annually to the public purse!

All of which raises some disconcerting questions about RNZ’s overall ideological agenda, and on whose behalf it is being run? Did Ms Blake-Persen’s highly tendentious story make it on to the airwaves simply because nobody thought to check it? Or, is it evidence of a broader RNZ agenda to shame and blame the older generation for having the temerity to be born a couple of decades before its younger reporters and presenters? It would be tempting to dismiss this suggestion as Boomer paranoia had the RNZ Board and its CEO not demonstrated so unequivocally their readiness to sacrifice older listeners for a “younger demographic” in relation to RNZ Concert.

One of the economists quoted in Ms Blake-Persen’s story is Shamubeel Eaqub. According to this participant in the management consultancy firm Sense.Partners:

“The reality is that we don’t want to penalise people for working into old age and neither do we want to penalise people for accumulating wealth, but we have to be consistent in our understanding that actually when we look out to the next 20 to 30 years, our system of taxation and our systems of supporting old age and superannuitants probably isn’t sustainable.”

Oh, what a multitude of sins can be concealed beneath a little qualifier like “probably”! Even Ms Blake-Persen felt obliged (maybe there was a smidgen of editorial input after all?) to mention the apple-cart-upsetting finding of the Interim Retirement Commissioner, Peter Cordtz, that “the current cost [of NZ Superannuation] was sustainable for the next 30 years”. You pays your money and you makes your choice, apparently: the management consultant who has a problem with our current tax and pension systems; or, the guy who told us the former is more than equal to supporting the latter.

It will be interesting, BTW, to see whether the newly appointed Retirement Commissioner, Jane Wrightson, upholds Cordtz’s finding on the sustainability of NZ Superannuation. It is to be hoped that his pronouncements weren’t inspired by the, sadly, not unreasonable fear, that the new boss would soon be touting the same “we can’t afford it” nonsense as the old boss.

In the meantime we can only sit back and admire Ms Blake-Persen’s propaganda skills. Imagine the outrage among that “younger demographic” when they discover that a body of overpaid Boomers, equal in number to the entire city of Blenheim, is living high on the hog while they sweat away in the salt mines of Neoliberalism! Imagine their fear and loathing when presented with such doom-laden factoids as: “Last year, NZ Super cost $14.5 billion and that cost is increasing by more than $1b each year. By 2024 it's predicted to cost the country nearly $20b a year.” (A figure, BTW, that places us well below the current pension costs of many European states when measured as a percentage of GDP.) Or that – Quelle horreur! – “Inland Revenue figures showed 2500 people were getting Super payments while on incomes of more than $300,000”.

Just imagine it! $300K a year!

Once again, however, there is no mention of the Income Tax paid annually on that sum to the IRD: a trifling $89,920! Which is more than four times the $21,380 paid annually to an individual New Zealander aged 65+ and living alone.

What a pity Ms Blake-Persen didn’t round out her story by seeking comment from an old-fashioned democratic-socialist who has campaigned for years to see those earning $300K p.a. socked with a much more progressive rate of income tax. He or she could have explained how steepening the progressivity of New Zealand’s Income Tax would once again make possible all the things the members of Ms Blake-Persen’s generation missed out on.

Then we could all have agreed that it’s not the year you were born in that counts, but the responsibility of every generation to so organise society that young and old, alike, are able to receive their fair share of its bounty. That would be a political climate worth setting – and definitely preferable to the ideological climate RNZ’s bosses seem hell-bent on heating-up.

This essay was originally posted on The Daily Blog of Friday, 28 February 2020.

Divergent Generations.

Try And See It My Way: As the Latin root of the word – generāre, to beget – suggests, a “generation” is the span of time between the birth of parents and the birth of their offspring. A period of, roughly, 20-30 years. Obviously, those born during this period cannot help living through the same historical events; facing the same challenges; sharing the same joys and sorrows.

 

THERE HAS BEEN A LOT OF NOISE this past week about generations. Bill English’s NZ Superannuation announcement has sparked an explosion of arguments about when particular groups of New Zealanders were born, and to what, in terms of state support, their respective birth dates entitle them.

 

We have heard again (and again and again) about the perfidy of the Baby Boom Generation. We have been invited to feel the pain of the Millennials. There has even been an only half-tongue-in-cheek call to arms directed at the enigmatic Generation X.

 

Also in play – lest we forget – is the “Greatest Generation”. Though their numbers are fast declining, these are the New Zealanders who lived through the Great Depression and fought the Second World War. The first Kiwis to enjoy the social security of Labour’s “cradle to grave” welfare state.

 

But what exactly is a “generation”?

 

The Act Party leader, and its sole MP, David Seymour, offers a guide. In the Act Newsletter of 6 March 2017, he writes: “Adjusting the age [of eligibility for NZ Super] only works if it captures the massive Baby Boomer cohorts set to be retiring through to 2030. The impact of this adjustment will fall on gen-x (born 1965-80) and millennials (early eighties to late nineties). Again, an earlier, more gradual adjustment is needed.”

 

But Seymour’s divisions are far too arbitrary to constitute a reliable definition of “generation”. His deadly foes, the perfidious “Baby Boomers”, appear to include every New Zealander born between 1946 and 1966. Generation X, on the other hand, includes only those born in the 15 year period between 1965 and 1980. The Millennials (sometimes referred to as “Generation Y”) are an even more indistinct group: encompassing Kiwis born any time between the “early eighties to late nineties”.

 

As the Latin root of the word – generāre, to beget – suggests, a “generation” is the span of time between the birth of parents and the birth of their offspring. A period of, roughly, 20-30 years. Obviously, those born during this period cannot help living through the same historical events; facing the same challenges; sharing the same joys and sorrows. It is on the basis of these common experiences that a term like “Baby Boomer” acquires a measure of respectability.

 

What Baby Boomer does not remember The Beatles? Neil Armstrong’s “one giant leap for mankind”? The Vietnam War? Who can deny that the Boomers were raised at a time of unprecedented and prolonged economic prosperity? Or that the confluence of general affluence and the rapid expansion of higher education gave rise to a cultural revolution that is still unfolding fifty years later?

 

But if the first of the Baby Boom generation’s offspring started appearing between 1965-70, when did Boomers’ children begin having children? Did they, like their parents, start their families around the age of twenty? Or, by the time the Baby Boomers’ kids reached adulthood, had the average onset age of family formation advanced from the early 20s to the early-to-mid 30s?

 

Viewed from this perspective, in the roughly 70 years since the end of World War II there have only really been two generations: the Baby Boomers and the children of the Baby Boomers. And, if that is the case, then there are really only two coherent assemblages of historical events available for consideration when it comes to any discussion of defining generational experiences.

 

For the Baby Boomers, it was the social-democratic era, which extended from 1945 until the mid-1980s. For their children, it has been the neoliberal era, which kicked-off here in 1984 and is still with us today.

 

It is difficult to conceive of two more divergent eras. The social-democratic era was distinguished by economic, social, political and cultural expansion. The neoliberal era by the reverse.

 

One has only to consider the extraordinary generosity of the social-democratic state: its commitment to full employment and elder support; its provision of health care and housing; its democratisation of learning; and its empowerment of civil society; to grasp the true extent of New Zealand’s fall from grace.

 

To hear David Seymour tell the story, that fall has been the life’s work of the selfish Baby Boomers. He could not be more wrong. The vast discrepancy of experience between the Boomers and their children is not based on the social pathology of a single generation, but on the mutually-protective selfishness of a single social alliance.

 

Between the capitalist owners of New Zealand, and the professionals and managers who service them, there exists an unshakeable resolve to extinguish the social-democratic era’s legacy of social solidarity by eliminating every last institutional instance of, and opportunity for, its popular expression.

 

The only inter-generational conspiracy that makes ethical sense in 2017, is an electoral plot which commits the Baby Boomers and their offspring to the rescue of their children and grand-children.

 

This essay was originally published in The Press of Tuesday, 14 March 2017.

Why is the Neoliberal Establishment so Pissed-Off with Bill English?

Off Message? Listening to the business journalist, Fran O’Sullivan, last Friday morning [10/3/17] on RNZ, the fury and frustration of the neoliberal establishment was evident in every bitter syllable of her commentary. Her rage at the now solid phalanx of NZ Super political defenders which English’s blundering has brought into formation (Labour, the Greens and NZ First) was palpable.

 

IT’S DIFFICULT TO AVOID THE IMPRESSION that the neoliberal establishment is very pissed-off with Bill English. His handling of the NZ Superannuation issue has been an unmitigated disaster from beginning to end. The media wasn’t briefed. National’s surrogates in academia and the business community weren’t primed. The public was not prepared.

 

Unfortunately, for any proposal to reform an institution as popular as NZ Super to have the slightest chance of success, all three of the above groups must be ready to hear it. One can only imagine the frustration of the Retirement Commissioner, Diane Maxwell, as she watched all her patient public diplomacy reduced to ashes in English’s ill-considered political bonfire.

 

English’s actions take on an even more absurd aspect when one recalls that there is a time-honoured and well-tested process for slaughtering a cow as sacred as NZ Super in relative political safety.

 

For a start, it is ill-advised to announce such plans in the early months of an election year.

 

Ill-advised, but not automatically fatal. Instigating an extensive and entirely independent review of any given set of current public policy settings is eminently survivable – if that is the sum total of your announcement. Indeed, it generally prompts hearty praise from all those “experts” agitating for change. It also allows the instigator to refuse the media anything further in the way of specificity until the review is complete.

 

Had English adhered to this process with NZ Super he could also have increased the political pressure on his principal electoral foes. Labour, in particular, would have found it extremely difficult to oppose any government call for a cross-party commitment to a comprehensive review of NZ Super. After all, in both the 2011 and 2014 general elections, reforming NZ Super had been Labour’s policy. The Greens, likewise, could hardly refuse to join in a sober, without prejudice, quest to arrive at the broadest possible political consensus on this highly contentious issue.

 

NZ First could not, however, credibly lend its name to such an effort without, at least implicitly, being bound by the review’s eventual recommendations. But such a dog-in-the-manger stance would put Winston Peters in an extremely difficult position.

 

Refusing to endorse a review of NZ Super would, presumably, leave NZ First no choice but to refuse to enter into any confidence and supply agreement that did not include its cancellation. Assuming both Labour and the Greens had joined National in supporting the proposed review, NZ First would have nowhere to go but the cross-benches – a position of acute and ever-increasing political precariousness.

 

The beauty of establishing any sort of official inquiry is, of course, that the people doing the establishing get to appoint the people doing the inquiring, and to draft their terms of reference. In almost every case this more-or-less guarantees that the inquiry will produce recommendations which correspond remarkably closely to the wishes of those who set it up.

 

In other words, English had the chance to appoint a Royal Commission of Inquiry into NZ Superannuation which, after weeks of hearings, and months of deliberation, solemnly recommended to his government that not only would the age of eligibility have to be advanced – and quickly – but also that the means of calculating the quantum of NZ super would have to be altered, and a means-testing regime established.

 

Because Labour and the Greens would already have signed up to the inquiry, their endorsement of its recommendations would be automatic. Any ensuing legislation would thus be guaranteed an overwhelming parliamentary majority.

 

Imagine the celebrations at Treasury, the NZ initiative and across the financial sector. Not only would the whole issue have been depoliticised for the foreseeable future, but also (and best of all!) no neoliberal fingerprints would ever be found on the gun that killed the last great universal entitlement of the social-democratic era.

 

All of these highly-sought-after right-wing objectives have now been put at risk by English’s ineptitude. Listening to the business journalist, Fran O’Sullivan, last Friday morning [10/3/17] on RNZ, the fury and frustration of the neoliberal establishment was evident in every bitter syllable of her commentary. Not only that, but in her rage at the now solid phalanx of NZ Super political defenders which English’s blundering has brought into formation (Labour, the Greens and NZ First) she blurted out the Right’s true intentions.

 

In the event of a National victory in September, Act (acting on behalf of the neoliberal establishment) will insist that means-testing and a reduction in NZ Super’s purchasing power be added to the legislation sanctioning the (immediate?) extension of the age of eligibility to 67.

 

No confusion now about the Right’s murderous intentions towards NZ Superannuation – and not the slightest doubt as to whose fingerprints will be found on the gun.

 

This essay was originally posted on The Daily Blog of Sunday, 12 March 2017.

The Superannuation Crisis Nobody's Talking About.

Outdated Assumptions: None of the Right’s nostrums adequately address the devastating impact which the rising trend of young people renting, rather than owning, their dwelling-places is bound to have on the affordability of NZ Superannuation. The key assumption of the present system is that a very large proportion of New Zealanders aged 65-and-over will continue to enjoy freehold possession of their own home. NZ Super simply isn’t configured to provide an income large enough to cover not only the over-65’s basic living expenses, but their accommodation costs as well.

 

THE ACCEPTED WISDOM concerning NZ Superannuation is that it will become unsustainable if nothing is done to make it more affordable. I agree. But what the acceptably wise believe needs to be done, and what actually needs to be done, are two very different things.

 

There is no institution more acceptably wise than the New Zealand Treasury – and its prescription for NZ Super is harsh. Not only does it favour the age of eligibility being pushed out beyond 65, but it also wants that to happen a lot sooner than 2040.

 

And that’s by no means all. To rein-in the long-term cost of the scheme, Treasury also favours changing the way the quantum of NZ Super payments is calculated.

 

As is so often the case with Treasury, however, there is more to these gnomic prognostications than meets the eye.

 

In political-economic terms, Treasury is as dry as the Atacama Desert. As both the fountainhead and champion of neoliberalism in New Zealand, it operates according to a remorseless set of right-wing ideological assumptions. None of these are compatible with the principle of universal entitlement which lies at the heart of the NZ Superannuation scheme, as presently configured.

 

Indeed, Treasury’s recommendations have very little to do with NZ Superannuation, per se. Rather, they are based on what it considers to be an “acceptable” level of long-term government debt. This it has set at 20 percent of GDP.

 

Possible policy pathways to this ideologically arrived-at figure include: quietly enhancing the revenue-gathering effects of fiscal drag; increasing the rate of GST; and significantly reducing government spending on health.

 

It’s easy to see why the Prime Minister chose the option of “reforming” superannuation!

 

Equally easy to see is Bill English’s determination to lead an “Austerity Government”. Reducing long-tern Crown indebtedness to 20 percent of GDP is simply not achievable without savage cuts in public spending.

 

The biggest public spenders, by far: NZ Superannuation, Social Welfare, Health and Education; will be the first to feel English’s austerity lash. If the National-led Government is returned for a fourth term, then New Zealanders should brace themselves for the same sort of harrowing headlines currently besetting the UK and Europe.

 

None of the Right’s nostrums, however, adequately address the devastating impact which the rising trend of young people renting, rather than owning, their dwelling-places is bound to have on the affordability of NZ Superannuation.

 

The key assumption of the present scheme’s defenders is that a very large proportion of New Zealanders aged 65-and-over will continue to enjoy freehold possession of their own home. NZ Super simply isn’t configured to provide an income large enough to cover not only the over-65’s basic living expenses, but their accommodation costs as well.

 

Those Generation Xers who airily opine that “superannuation probably won’t be there for me”, really need to think this through. Are they truly that confident of their ability to save a capital sum large enough to carry them through their old age unaided by the state? And if not, how do they see themselves surviving on a pension currently set at a figure well below their weekly accommodation costs?

 

A Treasury less obsessed with leading us further into the arid wilderness of free market economics would already be grappling with this looming social disaster. A government genuinely concerned with the future welfare of its younger citizens would be demanding answers – right here, right now.

 

Politicians of the Left, in particular, should be looking at the interlinkages between housing unaffordability and the increasingly insupportable burden NZ Super is predicted to become in 30-40 years’ time.

 

This is not a Baby Boomer crisis: it is a crisis which, if a radical revision of New Zealand’s entire system of economic management is not undertaken more-or-less immediately, is going to engulf the Boomers’ children and grandchildren.

 

The re-design of our welfare state must begin now. Not on the basis of meeting the arbitrarily determined targets of ideologically-driven fanatics, but on the basis of meeting the measurable and predictable needs of the entire population. Everything must be thrown into the mix: taxation policy; housing policy; health policy, education policy and, most importantly, how to guarantee a living income to young and old alike.

 

The alternative to systemic change is systemic collapse. With old age becoming, once again, a looming spectre of misery, loneliness and despair.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 10 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.

Don't Riot For A Better Society - Vote For One!

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.

Intergenerational Mischief-Making.

Natural Allies: What a tragedy it would be if, at the precise moment that the inevitable real-world effects of neoliberalism – poverty, indebtedness, homelessness, precarious and/or under-employment – are manifesting themselves in ways that can no longer be hidden or explained away, the urgently needed political programme uniting old and young was forestalled by a cynical ideological project aimed at setting the Baby Boomers and Generation Rent at each other’s’ throats.

 

A WAR BETWEEN THE GENERATIONS looms, unless we move swiftly and decisively to avert it. Those born after 1966 will be pitted against those born in the first two-thirds of the Twentieth Century – most particularly, that massive demographic bulge born in the 20 years immediately following World War II: the Baby Boomers.

 

The narrative justifying this war is already in play. Among younger New Zealanders it takes the form of a bitter litany:

 

The Baby Boomers, who had everything given to them, are making us pay.

 

The Baby Boomers, who enjoyed state support into tertiary education, employment and housing, have pulled up the ladder after them – forcing us into lifelong debt.

 

The Baby Boomers, who are now in or approaching their 60s, are not only keeping us out of their well-paid jobs, by continuing to work, but also demanding that our taxes be used to fund their superannuation.

 

The Baby Boomers, who are selfish, greedy hypocrites, should be made to pay for the many injustices they have visited upon their children and grandchildren.

 

There’s more than a little truth in these accusations. Certainly the Baby Boomers constituted a significant proportion of the electorate during a period of extraordinary economic, social and political change.

 

But, hold on a moment, couldn’t a series of very similar arguments be constructed by pitting other social groups against one another? Maori against Pakeha, for example? Or Women against Men? And wouldn’t most of us pause before marching-off down those particular roads? After all, people do not choose to be born Male or Female, Black or White – any more that they chose to be born between 1946 and 1966. The other reason to pause, of course, is the very long list of evil consequences that flow from stereotyping whole classes of people. How would those who see nothing wrong in branding all Baby Boomers “selfish” and “greedy” respond to someone branding all Maori “violent” and “lazy”? Or, all women “weak” and “foolish”?

 

There are more than a million Baby Boomers in New Zealand – roughly one quarter of the country’s population. That’s a helluva lot of people! Can every one of them be “selfish”? Are they all “greedy”?

 

Let’s take a look at housing – a subject guaranteed to enrage the members of so-called “Generation Rent”. To hear them tell the tale, every Baby Boomer is the smug owner of multiple properties, as well as the grasping landlord of every young New Zealander condemned to a lifetime of living in other people’s houses. A truly depressing picture – but is it accurate?

 

Unfortunately, there is no legal requirement for landlords to register with a government agency. According to the Minister for Building and Housing, however, there were (as of 5 May 2015) 129,450 landlords who had registered one or more bond(s) with the Ministry of Business, Innovation and Employment. Which strongly suggests that only about 1 in 10 Baby Boomers are landlords. (And that’s after assuming, almost certainly incorrectly, that every landlord is also a Baby Boomer!)

 

What percentage of all those generations who came before the Baby Boomers were landlords? We might well ask. Was it lower, higher, or about the same? Whatever the correct answer, the above figures demonstrate the rank unfairness of stereotyping people purely on the basis of when they were born.

 

Young New Zealanders need to be very wary of the growing number of individuals and groups who are inviting them to buy into a simplistic and extremely dangerous conspiracy theory. Because the Baby Boomers are no more conspiring to ruin the lives of young Kiwis (who are, after all, their children and grandchildren!) than the Jews were conspiring to ruin the people of Germany. Rather than make war upon their own parents and grandparents, “Generation Rent” should ask themselves the critical question: cui bono? Who benefits from transforming a whole generation of New Zealanders into scapegoats?

 

As the co-authors of Generation Rent, Shamubeel and Selena Eaqub, make clear, the rise of what they call “housing apartheid” is directly traceable to the late 1980s and early 1990s. The same, roughly 30-year period during which the neoliberal reforms of Roger Douglas and Ruth Richardson have, so dramatically, re-shaped New Zealand society.

 

What a tragedy it would be if, at the precise moment that the inevitable real-world effects of neoliberalism – poverty, indebtedness, homelessness, precarious and/or under-employment – are manifesting themselves in ways that can no longer be hidden or explained away, the urgently needed political programme uniting old and young was forestalled by a cynical ideological project aimed at setting the Baby Boomers and Generation Rent at each other’s’ throats.

 

Those who would punish the Baby Boomers for Neoliberalism’s crimes against the Welfare State should first be satisfied that the vicious political marginalisation of their parents’ generation, is not followed by the economic destruction of their own.

 

This essay was originally published in The Press of Tuesday, 9 June 2015.

"This Is New."

Game Changer: Labour's finance spokesperson, David Parker, has come up with a credible solution to the many problems associated with New Zealand's Reserve Bank Act mandated monetary policy. Labour now has a more convincing economic story to pitch to the voters than National. Game on!

 

KEYNESIANISM by other means. That’s what David Parker’s new monetary policy offers voters – and they should take it.

 

The measures announced by Parker on Tuesday morning constitute the long-awaited framework upon which the detail of Labour’s manifesto can now be hung. Indeed, without Parker’s proposed changes to the Reserve Bank Act and the Kiwisaver scheme, Labour’s promise to resuscitate the manufacturing export sector and create thousands of new jobs would’ve been empty. But now that Parker has provided the party with an economic skeleton to articulate its redistributive muscle, well: “Dem bones, dem bones gonna walk around!”

 

And it’s all Parker’s doing. Political observers have long dismissed the man behind Labour’s economic programme as an earnest, rather rumpled provincial lawyer and “policy wonk”. There’ll be a lot less of that now. For the first time in more than 40 years, Labour has developed a joined-up economic policy that is all its own.

 

Parker confirmed this himself when journalists demanded to know which other countries were running their monetary policy in the way he’s suggesting. “No one,” replied the Shadow Finance Minister with obvious pride, “this is new.”

 

That’s true – as far as it goes – but a close study of the way the Singaporean government has manipulated its superannuation and public housing schemes over recent decades might suggest that Parker is not alone in recognising the powerful monetary impact of raising and lowering the level of compulsory contributions to citizens’ savings funds. What really sets Parker’s plan apart is the way in which he has grafted what are, in effect, Keynesian demand management imperatives onto that most monetarist of institutions – the Reserve Bank of New Zealand.

 

“We propose an important new tool – varying the employee contribution rate for work based savings”, Parker informed his breakfasting business audience. “The variable savings rate mechanism – or VSR – would allow the raising or lowering of savings rates, rather than interest rates, to reduce or boost local consumption.”

 

Not only is Parker’s scheme sound economics (a judgement with which even the business community, however grudgingly, was forced to concur) but it is also spectacularly good politics.

 

A lower exchange rate bodes well for manufactured export and import substitution industries alike and that, in turn, points to job growth. Real job growth, that is: the sort that generates full-time, densely unionised, high-skill, high-wage employment.

 

And Parker’s story just gets better with the telling.

 

By utilising the VSR, rather than the Official Cash Rate (OCR) to take the heat out of the economy, the Reserve Bank Governor will be able to protect mortgage-holders from the sort of continuous income-squeeze they are currently undergoing. The VSR is unlikely to be wheeled out every six weeks in the manner of the OCR, and its wider application will almost certainly reduce each individual’s contribution. What’s more, the money being withdrawn from circulation will remain in New Zealand. The average Kiwi’s economic nationalist nerve cannot help but be stimulated by the knowledge that the big Aussie banks’ ability to turn New Zealand’s misery into Australia’s profit will be patriotically curtailed.

 

The question now for Parker and his boss, David Cunliffe, is how to bring the good news from Labour’s “war-room” to the party’s electoral base. Tuesday’s announcement has had the effect of binding Labour’s message into a single, coherent narrative – but it is not a story that can be told in a ten-second sound-bite. Social media can help in this respect, but Facebook and YouTube can only take this sort of story so far. Good news is best delivered in person.

 

The ideal vector for this type of message is the nationwide political tour. Cunliffe painting the picture of a kinder, gentler, more inclusive and economically productive New Zealand, while Parker details precisely how Labour proposes to take us from problem to solution.

 



Today He'd Use PowerPoint: In the election year of 1975 Rob Muldoon took his charts and graphs and tables on a nationwide tour to discredit Labour's economic policies - especially its NZ Superannuation scheme.

 

There would be an additional measure of delicious political irony in such a road-trip. Forty years ago Labour’s original superannuation scheme was systematically undermined by Rob Muldoon’s travelling roadshow. From town to town and on into the main centres the pint-sized “economic wizard” advanced with his charts and graphs and tables, and with every stop on his exhaustive itinerary the crowds grew larger and more convinced that Labour’s scheme (which today would be worth $260 billion!) was a bad idea.

 

How satisfying it would be to reverse the process.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 2 May 2014.

Labour Could "Just As Easily" Be National

Behind The Mask: When businessmen can no longer distinguish between National's and Labour's spokespeople, it's time for left-wing voters to start asking searching questions about the true beneficiaries of Labour's policies.

“IF YOU CLOSED YOUR EYES and just listened to Parker speaking – it could just as easily have been someone from National.” The business leader who said this of Labour’s finance spokesperson, David Parker, was being complimentary. And why not? The prospect of the two main political parties offering similar economic policies possesses charms to soothe the most savage capitalist breast. With nothing untoward to beset it, electorally, the business community can plan its future with confidence.

Labour supporters, however, have every reason to feel suspicious when businessmen heap praise upon the Opposition. The last time Labour pulled New Zealand capitalism’s irons out of the fire, the “Rogernomics” period of 1984-1993, still lies within the living memory of at least two-thirds of New Zealanders. Considerably less than half of them have cause to recall the economic disruption of those years with any fondness.

Much of the reason why Mr Parker’s speech to the “Mood of the Boardroom” breakfast in Auckland fell so mellifluously upon his wealthy listeners’ ears is attributable to Labour’s unwavering commitment to raising the age of eligibility for New Zealand Superannuation from 65 to 67. The opportunities which this policy opens up for the financial services industry (especially when combined with Labour’s pledge to make Kiwisaver compulsory) are considerable. Among the broader business community, however, Labour’s Superannuation stance represents an unstated promise not to pay for the pension by raising business and personal income taxes.

The one substantial tax measure Labour is promising, a Capital Gains Tax (CGT) enjoys strong support among certain sectors of the business community. The manufactured exports sector, for example, will welcome its ability to re-direct much needed investment away from the property speculation which has become New Zealand’s royal road to riches. Many other business leaders will welcome the CGT as a means of filling up the fiscal hole left by the 2010 tax-cuts.

For all those tax-payers born after 1966, however, Labour’s policies on NZ Superannuation, Kiwisaver and a CGT may well result in a reduction of living-standards.

As it stands, Labour’s plans to lift the age of eligibility for NZ Super will more-or-less exempt the so-called “Baby Boomers” from contributing to its “rescue”. Though described as a way of preserving “intergenerational equity”, and in spite of the Opposition’s increasing recourse to rhetorical Boomer-bashing, Labour’s carefully phased increase will still allow the Boomers to kick-back at 65. It is Generations X and Y who will have to work an extra two years for a purely inflation-adjusted and quite possibly means-tested pension.

A compulsory Kiwisaver Scheme, administered by the private sector, has the potential to not only reduce the actual take-home pay of already hard-pressed low-paid workers and their families, but to further strengthen the finance sector’s already unhealthy grip on the New Zealand economy. Were these savings to accumulate in a state-owned and run investment fund, then workers’ deductions could be classed as contributions to the social wage. Sadly, Labour will not countenance the creation of such a fund. (Too much like socialism, perhaps?) It may, however, allow employers to offset their increased contributions to the workforce’s Kiwisaver accounts against future wage rises.

Labour’s decision to exclude the family home from its proposed CGT, may yet lead to an even more rapid escalation in house prices. Rather than purchasing multiple properties in expectation of pocketing substantial tax-free capital gains, wealthy home-owners may instead decide to redirect their investment into the house (or houses) their family lives in. Labour could have avoided such behaviour by setting a family home valuation above which the CGT would apply. Instead, by opting to exempt them, it’s exposed both itself, and young people trying to buy their first home, to the perverse law of unintended consequences.

Why, then, does Labour persist with these business-friendly, Rich List-cossetting policies? Why not adopt fiscal measures more in keeping with its social-democratic principles? Throughout the 1950s, 60s and 70s, when the top bracket of personal income tax was frequently well in excess of 65 percent, New Zealand enjoyed the longest period of sustained economic growth in its history. The provision of social needs like old-age pensions, entry-level housing, ready access to health and education services and cheap utility prices were all predicated on citizens paying their fair share of tax.

Not any more. Rather than making the case for full employment and a just distribution of the nation’s wealth through a genuinely progressive system of taxation, Labour seems determined to base its economic programme on the fiscal status quo. Such a position cannot help but make it difficult to distinguish Labour’s finance spokesperson from National’s finance minister.

Poverty cannot be eliminated by cossetting wealth. Living standards cannot be lifted by reducing workers’ take-home pay. Homes cannot be made more affordable by offering tax-free rewards for making them more expensive.

Labour cannot serve labour by turning itself into National.

This essay was originally published in The Press of Tuesday, 31 July 2012.

Baby Boomers Beware

Disputed Destination: New Zealand's world-beating, state-provided universal superannuation scheme offers unprincipled politicians and rapacious financial institutions a tempting target. The Baby Boom Generation (1946-1965) is fast becoming the preferred scapegoat of these "reformers".

THERE’S NOTHING NEW about Welfare Reform, it’s as old as the ideas advanced in its justification. Managing the poor and vulnerable is just one of those perennial problems with which governments of every stripe have to contend.

Mostly, politicians restrict themselves to tinkering, but every so often a government comes along which engages in the sort of ruthless, root-and-branch reform that leaves deep scars upon the body politic. Fortunately, the bitter historical memories handed down by its victims serve as a prophylactic against similar “reforms” for generations. But, eventually, popular memory fades, and when it does the threat of root-and-branch reform returns. And tragedy follows it.

New Zealand may soon be facing just such a threat and, curiously, it’s as likely to come from the Left as the Right. If that sounds improbable, then perhaps we should all remind ourselves that it was the supposedly left-leaning Labour Party which unleashed the “New Right” economic reforms of the late-1980s. And that it was no less a “liberal” than Bill Clinton who campaigned on a promise to “end welfare as we have come to know it” and who, in 1996, affixed his Presidential signature to the Personal Responsibility and Work Opportunity Reconciliation Act.

President Bill Clinton signs the Personal Responsibility and Work Opportunity Reconciliation Act, putting an end to "welfare as we have come to know it", August 22 1996.

But why would Labour do such a thing? How could attacking the poor and vulnerable possibly assist its reclamation of the Treasury benches?

Part of the answer lies in the “communitarian” beliefs evinced by followers of Labour’s “Third Way”. It’s a philosophy which asserts that too much emphasis has been placed on “rights” and not enough on “responsibilities” in the formulation of public policy. Society, they say, has a duty to see that one group of citizens’ rights are not upheld at their neighbours’ expense.

The implications of communitarianism for solo mums, the unemployed, the sick and the disabled are readily imagined. Indeed, they’d do well to remember that David Parker, Labour’s finance spokesperson, is a strong believer in communitarian principles.

The other reason Labour might opt for root-and-branch welfare reform involves the same reasoning that went into the National Party’s own root-and-branch solutions to the “problem” of “welfare dependency”: poor people don’t vote. Eight hundred thousand New Zealanders failed to cast a vote in the last election. Most of them were young, many of them were poor, and practically all of them didn’t give a stuff about politics.

Motivating such voters requires immense effort, and National has opted instead to appease its more conservative supporters by transforming the young and the poor (Maori and Pasifika especially) into handy targets.

Labour’s challenge is to find some way of mobilising the young without at the same time making itself a political hostage to the needs of the poor. One of the easier ways to do this might be to provide younger voters with a hate figure: a stereotype capable of igniting both their indignation and their fear. Fortunately for Labour, such a stereotype already exists: the Selfish Baby Boomer.

By encouraging Generations X and Y to blame the Baby Boomers for everything from the price of real estate to the rising cost of tertiary education, and enlisting their support for a “root-and-branch” reform of New Zealand’s “irresponsibly generous and fiscally unsustainable” system of universal superannuation, Labour could off-set its declining levels of support among older voters. By attributing New Zealand’s indebtedness to the “intergenerational theft” of Baby Boomers, this stripped-down, communitarian Labour Party could, at least in younger voters’ minds, transform “austerity” from a political swear-word into a righteous electoral virtue. In combination with the Greens’ bracing mantra of ecological restraint, they could be on to a winner.

In 1834 the newly enfranchised English middle-class shrugged-off its responsibilities to the poor and vulnerable by passing a new Poor Law. Its hated symbol, the workhouse, was immortalised by Charles Dickens in Oliver Twist. The new Poor Law’s sponsor was not some Tory reactionary, but the liberal Whig, Lord Melbourne.

The Workhouse: The New Poor Law of 1834 brought these dreaded institutions into existence. They were explicitly required to offer conditions harsh enough to dissuade all but the most desperate (overwhelmingly, as the above photograph reveals, the elderly) from seeking sustenance within their walls. The legislation was the work not of Tory reactionaries, but of liberal Whigs.

Baby Boomers, be on your guard.

This essay was originally published in The Dominion Post, The Otago Daily Times, The Waikato Times, The Taranaki Daily News, The Timaru Herald and The Greymouth Star of Friday, 22 June 2012.

Who Is "Everyone"? Some Thoughts On The Superannuation Debate

Tout le Monde? - C'est Moi! At the core of the current "debate" about the sustainability of NZ Superannuation are the same forces that have dismantled so much of the welfare state already: the forces of domestic and global finance. All the more curious, therefore, that Labour should be lining up behind them.

MY DAUGHTER AND I were driving back from the mall Saturday afternoon, listening to the news on the car radio. “Everyone” was saying that New Zealand’s superannuation scheme was in trouble. “Everyone” was similarly in agreement that the retirement age would have to be raised from 65 to 67 years. “Everyone” was also absolutely convinced that if this didn’t happen soon the whole scheme would become unsustainable.

I remember saying to my daughter: “Whenever you hear a news bulletin like that you should always ask yourself who this ‘Everyone’ is.”

“Everyone” certainly does not include a clear majority of New Zealand’s political parties.

The governing party, National, is resolutely opposed to making any changes at all to New Zealand Superannuation. NZ First is equally adamant that there should be no change – unless it involves lifting the percentage of the net average wage paid to superannuitants from 66 to 68 percent. The Green Party, likewise, opposes changing the scheme. Ditto for Mana and the Maori Party. (Indeed, given Maori New Zealanders’ lower life expectancy, they believe the eligibility-age should be lowered – not lifted!) United Future also supports keeping the age at 65, but proposes that citizens be encouraged to remain in the workforce a little longer, and uplift their super’ later at a higher rate. Or, retire earlier, but at a lower rate.

The only major party currently advocating increasing the age of eligibility (from 65 to 67) is the Labour Party. In this they are supported (albeit very quietly) by the tiny, far-right, Act Party.

Labour justifies its position by pointing out that in just a few years New Zealand will be spending as much on superannuation as it does on education. What a curious argument. Why would a social-democratic party be suggesting that the state should spend less on its older citizens than it does on the young? We can only hope that Labour’s strategists are not planning to turn the younger voters of Generations X and Y against the “selfish” Baby Boomers. David Shearer hasn’t quite accused this latter group of “intergenerational theft” – but that’s the electoral logic of his position.

Having established that “Everyone” does not include most of the country’s politicians, let’s take a look at who it does include. Perhaps the most significant member of the “Everyone” group is the Retirement Commissioner, Diana Crossan. Charged with providing the Government with “independent” advice on retirement issues, the Commissioner’s views should, on the face of it, be accorded considerable weight.

The only problem with being guided by the Retirement Commissioner is that her views on this crucial matter are starkly contradicted by a significant number of economists – including those working for the OECD. As these economists indicated in their recent survey of international retirement policies, New Zealand’s superannuation scheme compares extremely favourably with all those operating in the 34 “First World” countries it covers.

Right now, in 2012, our scheme absorbs less than 5 percent of New Zealand’s GDP – that’s about half the amount spent by the other OECD countries. Yes, it is going to rise as the “Baby Boom” generation reaches retirement age, but only to the percentage of GDP most wealthy countries are paying right now. New Zealanders should be very proud of their scheme, which is not only extremely cost effective, but also ensures that all our elder citizens are entitled to a level of income security unsurpassed anywhere else in the world.

So why is our Retirement Commissioner crying “Wolf!” on the cost and sustainability of the New Zealand scheme? Perhaps Ms Crossan’s views have been influenced by her former employer – the financial institution which started out as the Australian Mutual Provident Society – now known as AMP. This massive financial institution merged last year with AXA Asia and Pacific Holdings, and just under half its shares are held by HSBC, JP Morgan and Citigroup.

And that’s the scary thing. When you dig into the people and institutions making up “Everyone”, you discover that just about all of them, in one way or another, are bound up with vast financial corporations, all possessing a powerful vested interest in wrenching the provision of citizens’ basic retirement income out of the hands of the state and into their own, private, talons.

As is so often the case, these vast corporate bodies, working through their highly skilled and fearsomely resourced PR organisations, have contrived to create an apparently genuine consensus that change is both necessary and inevitable. So successful have they been that, in a recent TV3-Reid Research poll, nearly two-thirds of New Zealanders dutifully regurgitated the opinion, force-fed to them by the finance industry, that the eligibility-age for National Super should rise from 65 to 67.

“Everyone” does not believe superannuation is unsustainable, but repeat the lie often enough and everybody just might think it’s true.

This essay was originally published in The Press of Tuesday, 19 June 2012.