Health focus as Nats dash fund accord

By VERNON SMALL deputy political editor

The National Party will this week vote to reject Finance Minister Michael Cullen's giant superannuation fund, but will flag extra spending and tax cuts as it moves to establish a new economic direction.

That will include plans for significant extra cash for health, a boost for research and tertiary education and a cut to the company tax rate.

The extra cash would come from the money the Government has allocated for its scheme to partially pre-fund the cost of baby boomers' pensions.

The May Budget set aside $600 million this year and $1.2 billion next year for the fund, with provision for $2 billion and then $2.8 billion in the two Budgets after the 2002 election.

National's caucus meets today to decide how it will vote on the Government's superannuation bill. The party plans to announce its position before its three-day annual conference in Auckland starting on Friday.

It is certain to vote in favour of part one of the new law, backing the existing superannuation entitlement set at 65 per cent of the average wage paid at age 65 to a retired couple.

But it will reject part two of the bill, which establishes the financing mechanism for the pre-funding scheme, finally dashing any hopes of a broad multi-party accord on superannuation.

Deputy leader Bill English yesterday confirmed that a decision was imminent, but said the issue was not just about superannuation.

"It is about the policy choices the Government has and whether it has the tools to be able to have some reasonable impact on the economic prospects. Locking yourself into the scheme means a whole lot of hard yards over health and education."

He said Labour was facing a major problem by forcing hospitals to go into debt.

"The squeeze there is becoming increasingly apparent and is going to get worse, not better. Health has pushed its way to the front of the queue and is starting to raise its head again as a top-rating issue with the public."

He said the caucus was also having "a good hard look" at corporate tax cuts.

It is understood to favour a cut from 33 per cent to 30 per cent.

National, struggling to make an impact in the polls, sees superannuation as a way to differentiate itself.

But Mr English said he was aware there could be a public backlash from National's opposition to the fund.

It plans to counter that by highlighting the fiscal straitjacket the Government is imposing on itself through the fund and how that will limit the money available for things like health.

National would stress the opportunity the "fiscal headroom" would give it to promise extra social spending, particularly in the hard-pressed health sector, and give the economy greater impetus.

Mr English said his party was looking at adopting a pensions policy similar to the Australian scheme, with compulsory savings into individual accounts, or a range of tax incentives to boost voluntary savings.

National had not rejected a compulsory scheme, but it would be a very complex solution.

The superannuation legislation should be back in the House when Parliament resumes next week.

The Coalition has the numbers to pass both parts of the bill with the backing of New Zealand First.