Editorial: Country far from sacrosanct super

The National Party's decision not to support the Government's superannuation fund sets the stage for the next election to be fought on the issue. With echoes of 1975, a Labour Government will be seeking re-election with a public savings scheme, which National will promise to cancel if elected, and offer instead the same level of pension from current taxation.

But there will be an important difference this time. In 1975 Labour was running with a fund that would take 40 years to pay the promised benefit. This time Labour and National are offering the same benefit; the election issue will be how to pay for it. And that question will be answered more easily by Labour. The policy now adopted by the National caucus is notably silent on the issue.

National has decided to support the first part of the Government's superannuation bill, which reinforces the present terms of the pension: payable to everybody at age 65 regardless of private means, at a rate for a couple that must not fall below 65 per cent of the average wage. If the wage relativity looks a trifle fussy, it has acquired a certain political cachet in recent years. National, when in office, tried to remove that "floor" as a means of containing the cost of superannuation as the baby boom approaches retirement.

It would have been a relatively painless "cut" since the pension would remain indexed to the cost of living. But National has given it away now, along with any alternative means of making superannuation affordable 10 or 20 years hence. After its election defeat the party reverted to a policy of full, non-means-tested pensions only for those in or near retirement. Now it makes that commitment unconditionally. It is simply not credible.

Labour's fund, for all its limitations and pitfalls, is at least a suggestion. It does not pretend to provide more than 14 per cent of the cost of public superannuation at the fund's maturity, and it will not, for as long as Labour has its way, set up individual accounts that could entice taxpayers to voluntarily save a bit more. But it will be an honest attempt to relieve the burden of the next generation if - and only if - Government borrowing does not increase at the same rate.

If Labour increases the public debt there will be no point putting surplus taxation into a savings fund. Any benefit for future taxpayers would be compromised. Even if the fund is genuinely saved from Budget surpluses, the benefits to the economy are debatable. It may be that the economy would grow better in the meantime if those surpluses were returned to taxpayers to be spent or invested privately. That will be National's view, and it deserves to be debated rigorously in the run-up to next year's election.

But to argue that the economy would do better if the surpluses were returned to taxpayers is not to say the economy would do well enough to generate the wealth needed to pay superannuation at today's value by the time the baby boom is retiring in great numbers. For credibility National will need to come up with some means of making economies. With courage, it would propose a means test, which is bound to be needed in the end.

The country seems as far as ever from a settled, sacrosanct superannuation regime. Labour's fund, however well intentioned, already looks unlikely to survive a change of Government. Perhaps that is the only signal National intended to send with its decision to oppose the fund. Certainly, National offers nothing yet that could be called constructive or even credible.