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After nearly a decade out of power, it’s easy to forget how dreadful, cynical and short-sighted the National Party has been in the past, especially in regard to the treatment of retired New Zealanders.  They have done it again, with waffle on KiwiSaver.

When the universal pensions were established by the first Labour Government, the National Party of the day called it ‘applied lunacy’.  Prime Minister Savage sweetly replied, calling compulsory state pensions for the elderly, ‘applied Christianity’!  This scheme became a model for welfare systems in many countries.  Everyone began to pay personal tax at one and sixpence in the pound.  For generations, New Zealanders would say we paid tax, therefore we deserve our state pension.   This was a hoax, the one and sixpence never covered the costs of our growing welfare state.  When the first pensions were paid, they would have covered about 10% of the population, unchanged they would now cover up to 30% of the population.  Understanding this grim reality, the Kirk Government in the early 1970’s introduced a compulsory savings and superannuation fund.  This boldly changed the idea of the 1938 legislation that essentially paid out each year what was taxed, borrowed, or by deficit budgeting, simply printing money to cover shortfalls. Compulsory superannuation would create an investment fund which would pay out pensions.  Rob Muldoon and National opposed the scheme brilliantly, suggesting during the 1975 election campaign in ‘Cossack dancing’ TV advertisements, that the scheme’S investments would take over NZ.  Incredibly, National than paid back everyone’s contribution into the scheme, and for good measure, gave individuals the employer’s contribution.  Even more cynically, National promised to drop the retirement age from 65 to 60 and said retired folk would get 80% of the average wage before tax.  I remember a constituent who had served in the Desert War and worked in a timber factory and had severe lung problems.  He said to me if he voted for me, he would have to wait 6 years to retire; if he voted National, he could retire next year, he was very sick, and didn’t think he would live another 5 years.  He didn’t.

The politics of all this has frightened off politicians for a generation.  I failed to convince colleagues in the 1980’s to recreate the savings scheme, perhaps kick- starting savings by putting some proceeds of privatisations into individual accounts.  I’m now convinced individual accounts with guaranteed minimums, topped up for those on low incomes, is the way to go.  I now think, unlike the 1970’s, the scheme should be managed in a competitive manner by more than one monopolistic state corporation.

For a time, little happened to our state pension schemes, National allowed inflation to devalue its purchasing power, and nibbled away at entitlements.  Then, a radical National Party appeared which called for a cross-party agreement on our system.  As Labour leader, I reluctantly entered into negotiations to make our system sustainable.  Politically, a big mistake, because the Bolger Government in opposition had promised to abolish the hated surcharge on pensions introduced by the labour Government in the mid-1980’s.  It covered the wealthiest top 20%.  Far from abolishing the surcharge, National increased it.  By agreeing to a bi-party position, I let the National Party off the hook of its dishonest promises, and this was bad politics.  It told 20% of New Zealanders that we were all the same.  I thought I was doing the right thing for NZ, silly me.  Years later, I was told by a former National MP that when this bi-party agreement, a display of statesmanship, was announced at the National Party caucus – what did they do?  Clap?  Cheer?  No, they laughed!  Gotcha.

Congratulations to this Labour Government for establishing a special fund to pay for pensions in the future.  The KiwiSaver, an encouragement to save for the future, is a good thing.  It will cover half of NZ, probably the wrong half, and has meant for many just a shift from existing schemes to claim tax advantages.  But it’s a good, worthy start.

National was recently flushed out, after an obscure MP said National was opposed to KiwiSaver, by saying at last, under pressure, they now accepted Labour’s KiwiSaver.

I’m now more convinced than ever, not only because it’s about social justice, social confidence, but a key driver of future economic growth if we established a compulsory savings scheme.  Singapore and Australia moved from a pay-as-you-go pension system to investment funds.  These savings help their economies immensely, and their pension systems are now secure.  What a shame we are now well behind other nations when we could have been well ahead by 20 years.  NZ would be so much better off, and the retired secure, if politics had not got in the way, as they always do with this logic

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