Fran O'Sullivan: Brash Super idea worth exploring

Don Brash. Photo / Mark Mitchell

It's become a cliché to blame baby boomers for most of the ills of our time. Like the global financial crisis, housing bubbles, and even the upcoming population bust which will result in a significant power shift this century away from the western developed world, to the new industrialised nations with their much younger and rapidly growing populations.

It won't be long before baby boomers are again blasted - this time for living longer and in bigger numbers that previous generations - thus burdening Kiwi taxpayers who will have to pick up the costs for the boomers' state-paid pensions and drain on health budgets.

This is an appealing leitmotif for commentators or politicians seeking to brand themselves by declaring generational war and/or the disturbingly guileless television hosts who provide ready propaganda platforms without doing the most basic homework.

But it should not escape notice that when former Reserve Bank Governor Don Brash tried to join the conversation over the long-term affordability of New Zealand's universal superannuation scheme this week it was two Generation X leaders - not a baby boomer - who quickly slapped him back into place.

Brash's proposition was simple: Raise the age of entitlement to NZ Superannuation from 65 to 67. But also allow people the option to retire earlier or later on different superannuation rates. It's certainly an idea worth exploring.

Prime Minister John Key won't even debate the proposal. He's happy with the way NZ super is working, was the fatuous response on TV3.

Bill English says there won't be any changes to either the qualifying age or payment levels. These are already built into the Government's long-term spending path and fiscal forecasts.

Trouble is new Treasury projections emphasise the Government's finances are not sustainable into the long-time. Trade-offs are necessary to keep them in order as Treasury Deputy Secretary Gabriel Makhlouf outlined in a paper presented to a conference on retirement income policy and generational equity.

By 2060, the Treasury projects there will be four people aged 65 and over for every 10 New Zealanders of working age between 15 and 64. That compares with a ratio of two to 10 today. The maths are blindingly obvious.

Political leaders of other countries like the US, Australia and Britain are in the process of raising their pension entitlement age to 67 or 68 as they grapple with the increasingly top-heavy nature of their populations. But they are addressing this issue.

Labour leader Phil Goff and his deputy Annette King - two baby boomers - missed an obvious opportunity to shake the Government up on this issue.

Labour clings to the notion that the Cullen Fund will smooth the big imposts that will hit the Government's finances. But that dream was surely punctured when New Zealand was hit by the global financial crisis.

Brash was born too early to be a baby boomer. He's part of what Americans William Strauss and Neil Howe in their seminal work Generations describe as the "silent generation". People born between 1925 and 1943 - a period shaped by the Great Depression and World War II.

A generation which Strauss and Howe believe spent its rising adult years in a post-war high; mid-life in an awakening and older age during the unravelling period.

A common touch point for leaders from this generation is that they advocate fairness and the politics of inclusion, and are irrepressible in the wake of failure.

Opponents of Brash's 2025 taskforce will argue that he is neither fair nor inclusive. But few would deny that he is irrepressible in the wake of failure.

Thus Brash continues to speak some unspeakable truths while Key stays focused on ensuring National gets back into power next year.

It's worth reflecting on what Brash would have done if he had gone on to lead National in Government in 2005.

A Brash government would undoubtedly have rocked the boat. But I suspect he would not have shied away from the major generational challenge of our time.

This situation should not be allowed to continue.

Future generations will marvel if New Zealand allows itself to be blocked from making a very adult policy response to inter-generational equity issues simply because Key has promised he will resign as Prime Minister if the superannuation qualifying age is changed.

They will question why he did not use his obvious salesmanship to make it clear that the impact of the global financial crisis has irredeemably changed the fiscal landscape.

Better one politician's embarrassment than a country consigned to pauper status because its Government won't do the right thing.