Fran O'Sullivan: Swallow your pride, John - the pension age must be raised

Joe Hockey wants an Australian pension age of 70. Photo / AP
Joe Hockey wants an Australian pension age of 70. Photo / AP

Joe Hockey's forceful realism over the need for Western- style nations to lift the age at which their citizens qualify for taxpayer-funded pensions strikes a chord.

In New Zealand, we live in an illusory bubble where a Prime Minister who made a small fortune finessing financial risk still holds to a rash pledge to resign if the qualifying age for national superannuation is raised above 65 years.

I'm not sure if John Key knows something the rest of us don't.

Maybe he is right that New Zealand can rock on without impoverishing future generations by expecting them to fund their elders through years of retirement.

Maybe we will strike oil. Or be struck by a meteor, making such argument redundant.

But when the Australian Treasurer said he wanted the pension age bumped up to 70 years by 2035, he based it on solid analysis.

That analysis persuaded Hockey that breaking one of the Liberal Party's pre-election promises was the right thing to do.

We've got plenty of similar analysis on this side of the Tasman.

Finance Minister Bill English knows this - it's his Treasury that pumps out the numbers and the policy prescriptions.

Hence his rather sheepish response when challenged at the luncheon he and Hockey fronted in Wellington on National's intransigence.

"I've got nothing new to say about the pension age," he said.

"We made a commitment. It's now become a matter of trust, as much as policy. The Prime Minister said he would resign if the age changes. If the age changes and he doesn't resign, no one would trust him ever again, even if they support the policy."

This is fatuous, and the Finance Minister knows it.

English gave the game away when he said that while National wasn't changing the retirement age, "a future government may well do that".

It is quite extraordinary that a Government that has won a strong reputation for fiscal prudence and good governance insists on placing its head in the sand.

As John Maynard Keynes said in that rather bastardised quote, "When my information changes, I alter my conclusions. What do you do, sir?"

If anyone could make the case for why - with new data - the age should be raised, Key could.

He could take it to an election and claim a mandate if successful.

This is an issue, as Key has shown all the signs of wanting to repeat the golden age of Keith Holyoake, who enjoyed four terms in government by not rocking the boat too much.

It's a different world now.

A huge wave of structural reform is happening in Australia.

Hockey's confident picture of a stronger and prosperous Australia - poised to be the world's largest exporter of energy within a decade, still quarrying massive loads of iron ore and sharing our destiny of being an Asian "food basket" - is good for New Zealand.

Hockey's "future Australia" will have an enormous demand for immigrants to staff all those gas wells, coal and uranium mines, quarries and farms - not to mention all the professional jobs that go with a prosperous economy.

"We're blessed to be in the fastest growing time zone in the history of humanity," the Australian Treasurer chirped as he exhorted an audience to take note of the "insatiable demand that was going to continue".

Sure we've cried a river about all the Kiwis who've crossed the Ditch for high-paying Australian jobs - but we'd have cried even more if they had stayed here and added to the jobless numbers when our economy was under pressure.

Plenty are now coming back or staying home as Australia stays in its deep funk while the Abbott Government puts the economy through long-overdue reform.

Here's another thing.

The Hockey vision suggests that once the Australian Government has its fiscal deficit under control, it should have no difficulty treating the many Kiwi "lifters" who have been helping build that prosperous future with a bit more humanity if they fall on hard times and have to become a "leaner" for a short while.

It's understandable that Hockey - in the Treasurer's role for less than a year - doesn't want to open up the Australian welfare system to New Zealand workers yet.

Some of those workers who have already paid plenty of tax into federal coffers are now stamping their feet via the Expat Party reminding politicians that they didn't go to Australia to be bludgers and should be treated more highly than guest workers.

Our politicians prefer to preserve Australia's status as an economic safety valve for New Zealand, rather than to make sure our citizens are treated more fairly by our neighbour.

It's time we did both.

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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