The age-old pension came about in response to the experience of hardship. A means-tested payment for those aged 65 and older was introduced in 1898, after a credit crunch and a long depression. Likewise the 1938 Social Security Act, which lowered the age of eligibility to 60 and introduced universal superannuation from 65, followed the "Great Depression".

The present discussion on superannuation also occurs in a recession grimmer than any in living memory. But this time the cupboard is bare.

It's not a surprise. The "baby boom" population bulge - the first of that generation has just reached 65 - has been a subject of consternation among economists for decades. But now the fiscal chickens are coming home to roost.

The investment-industry lobby group the Financial Services Council reports that the burden on the working-age population is about to get much heavier. There are more than five people in the workforce for every person over 65; within 30 years, there will be just 2.5.


Superannuation already consumes a quarter of the state's core operating expenditure. Treasury forecasts that, as soon as 2016, the annual bill will be $12.4 billion - as much as all education from early childhood to tertiary. To put it another way, in four years every member of the working-age population will have to pay $80 a week just to look after the retired.

Yet the National-led Government maintains a head-in-the-sand attitude to the looming crisis. Despite calls from all parts of the political spectrum - Labour leader David Shearer and former Reserve Bank Governor Don Brash are the most recent voices to be raised - Prime Minister John Key steadfastly refuses to countenance so much as a discussion of raising the age of eligibility for national superannuation.

His explanation - that he campaigned on not raising it and will resign rather than do so - may glisten with a surface allure of integrity. But the national and global economies are very different from what they were when he took power in 2008 and his stance now looks more foolhardy and pig-headed than principled.

Key rightly senses that moving to gradually raise the age would prompt a political backlash, but Shearer took the sting out of that danger this week when he offered to enter into bipartisan discussions that would defuse the issue's electoral explosiveness. The challenge for Key's leadership is to confront head-on the assumption of the generation now nearing retirement that things can be left to continue as they have been.

With good reason, the younger working-age population - the 1.5 million aged 15 to 39 - see their elders as greedy. A family man in the immediate post-war years enjoyed negative taxation - which is to say he gained more in state support, including low-interest housing loans, than he paid in income tax. For the next 40 years education, right through to tertiary level, was virtually fee-free and attracted generous state-funded living allowances. Paying to go to the doctor or pharmacy was unknown.

Now this privileged generation is pulling the ladder up after itself. Its frenzied investment in residential property has channelled tens of billions out of the productive economy in favour of foreign-owned banks The kids' bills keep mounting.

There is recent precedent for raising the age of eligibility: it went up from 60 to 61 in 1992, and then moved in stages to 65 by 2001. What was urgent then is critical now. John Key knows that, but rightly reckons that he won't be around to answer for the consequences of his present inaction. That's not leadership; it's cynical political calculation.

The baby-boomers will be the first generation in this country's history whose children will be worse off than they were. They need to surrender their sense of entitlement and it is the duty of Government to see they do. We must stop borrowing from our children. And if Key is not prepared to preside over a change of direction, he should resign and hand over to someone who is.