Cullen, Peters pave way for superannuation scheme

By JOHN ROUGHAN

The Government looks to have the numbers to pass its $600 million superannuation fund into law after a meeting at Parliament yesterday between Finance Minister Michael Cullen and New Zealand First leader Winston Peters.

Mr Peters, back in the limelight for the first time since the change of government, pronounced himself happy with the outcome.

The Finance Minister has agreed to a change to a clause in the bill that firms up the possibility of a future government converting the fund to individual accounts.

Labour remains opposed to individualising the scheme but needs NZ First's five votes following the Greens' decision not to support the legislation.

Dr Cullen intends to put a proposed wording of the clause to Mr Peters and get his approval in time to take a proposal to the cabinet next Monday.

Neither of them expected a hitch with the draft wording.

The clause covering the scheme's conversion allows a government to ask those running the fund to report within two years on how it could be converted.

The draft now being discussed would see a report, upon a government's request, completed within a year.

It would also specify that the conversion would mean all taxpayers would get an individual account on the basis of their contributions.

Mr Peters believed there would no technical difficulty in converting to individualised accounts, even without provision in the bill.

Inland Revenue keeps a record of everyone's taxation and it would be no problem, he said, in working out each taxpayer's share of the account.

Dr Cullen believes the conversion will get more more difficult as time goes on and people die or move overseas.

Mr Peters is less concerned about the practicalities at this stage. He said he wants to get the principle established.

"We are not asking for the fund to be personalised now. We are asking for a future Parliament to be able to individualise it and be capable of implementing that.

"We've gone 26 years mucking around with this issue. We need some definitive view that if it is the public wish at the time, and I believe it will be, personalised accounts can be speedily implemented."

"I want that [possibility] in front of the public now, so they can say, 'there's a fund and I can become a saver within it if I make a decision alongside other New Zealanders perhaps two years from now'."

Dr Cullen said he hoped the fund would soon be up and running. He did not think the change agreed yesterday needed to go back before a select committee. "It just clarifies what already there."

The Government wants to set aside surpluses to partly fund future superannuation demands. This amounts to $600 million in the coming year, growing to $2 billion.

Over time contributions dry up and the Government uses the fund to pay for part of super payouts. Other opposition parties last night condemned the Cullen-Peters deal.

National's finance spokesman Bill English said Mr Peters had "thrown in the towel."

"He knows there is no realistic expectation that the money in Dr Cullen's super fund will be divided into individual accounts," said Mr English.

The issue was, "too important to be decided by a backroom deal between the minority Government and a media attention-starved Winston Peters."

Act leader Richard Prebble appealed for all-party talks, saying a fund that could last 100 years should not be established as the result of a secret political deal.

"If Dr Cullen is saying the law can be altered by a future Parliament, then the concession is meaningless," Mr Prebble said.

"However, if Dr Cullen has changed his position, Act is very interested." Act supports funded superannuation in individual accounts.