National: Super to stay for boomers

Don Brash

Opposition leader Don Brash has confirmed the National Party will sign up to keeping Finance Minister Michael Cullen's brainchild, the New Zealand Superannuation Fund.

But the party believes committing to the fund will still give it room to offer voters personal and company tax cuts.

Dr Brash - who labelled the fund a "serious mistake" before the last election - announced the u-turn to the combined North Shore Rotary clubs last night although the fact was widely reported in the media last week.

He will today deliver Dr Cullen a letter committing National to supporting not only the fund but New Zealand Superannuation Act provisions to keep the present level of payments and age of entitlement - 65 per cent of the average wage at age 65 for married couples.

"If New Zealanders are ever to gain some confidence about the sustainability of New Zealand Superannuation, it is going to require an opposition political party to make the hard decision to stop kicking the political football," Dr Brash said.

He also pledged that those under 30 would get state-funded superannuation, saying it was a "tragic" misunderstanding that most young people believed they would get nothing.

He said the demographic pressures were manageable, and even in 20 or 30 years' time, if adjustments to the scheme were needed, there was little doubt that rising incomes would mean its value would be "much more generous" than now.

National Party finance spokesman John Key said maintaining contributions to the fund would not affect National's plans for tax cuts.

"There's unquestionable room for tax relief," he said.

National wants tax relief for low- to middle-income working people and to cut the corporate rate from 33 per cent to 30 per cent.

Following his speech, Dr Brash said National would set the company tax rate no higher than in Australia, where it is 30 per cent. Other tax rates would be reduced over time but he would not say by how much. Dr Brash said there would be a major announcement on National's policy in the next couple of months.

Mr Key said he had always supported the fund because it would reduce the superannuation liability.

Superannuation costs are set to double to 8 per cent of gross domestic product in about 30 years' time, and pre-funding some of that would reduce the burden by about 1.5 percentage points, taking the figure down to about 6.5 per cent of GDP.

"While that is more than what we are paying today, that is eminently manageable when you consider that the Italians today pay 12 per cent of GDP," said Mr Key.

Dr Cullen welcomed Dr Brash's "policy flip-flop", saying it would help secure the long-term viability of New Zealand Superannuation.

But he said the announcement was robbed of any surprise factor because members of National's caucus leaked the news last week.

Bill English, who campaigned against the fund as National's leader in the 2002 election, declined to comment other than to say he supported the decision.

With political distance put on the issue, he said the Retirement Commission's role should be expanded to lead a "national conversation" on future changes.

Greens co-leader Rod Donald said it was no surprise the two old parties were "hand-in-hand" on superannuation because they were on free trade and the free market as well.

Of the parties in Parliament only the Greens and Act now oppose the fund.

Progressive Coalition leader Jim Anderton welcomed National's commitment as sensible.

"All serious parties are now committed to putting away some money today so that we can better protect future retirees against the indignity of poverty in old age."

NATIONAL'S PROMISES

For people getting superannuation now or those retiring within a "decade or two": no changes to entitlement.

For younger people: Even if there are changes to the scheme in 20 or 30 years the value of their superannuation will be "much more generous" than today, thanks to rising incomes.

THE NZ SUPER FUND

Was established to partially fund national superannuation after 2020 and will reach $6.3 billion by next June.