Rodney Hide: Saving up for future pensions a smoke-and-mirrors ploy

Rodney Hide

The National Party's support of the Cullen superannuation fund is a political move that sells out hard-working New Zealanders.

Households are being squeezed by high taxes and rising prices. On top of this, the Cullen fund sucks $2 billion out of the economy each year - $1400 a year for each household.

National knows the Cullen fund is a dopey idea but is endorsing it anyway. Its aim is to minimise political differences and capture some middle ground.

Before National's u-turn, its leader, Don Brash, wrote: "The Cullen fund is nothing more than financial smoke and mirrors. It does not change the overall cost of superannuation one bit, merely shuffles around the timing of the costs in a way that has only a minor effect on the mid-century burden of the scheme, and even less on the cost by the end of this century, while resulting in substantial investment risk along the way."

Dr Brash was right. The Cullen fund serves no economic purpose. It is designed solely to give the appearance that the Government is doing something about super sustainability.

It is smoke and mirrors.

National's u-turn is designed solely to blunt the Government's criticisms by adopting Government policies. For this reason, too, National signed up to the Government's top rate of tax of 39c in the dollar.

Adopting Government policies may make it easier for National but does nothing to help hard-working New Zealanders. They are paying more and more to the Government for less and less.

The only way to provide for our elderly in the future is to ensure a strong and growing economy. The richer our country, the better we will be able to provide for pensions, healthcare and education.

Stuffing our Government full of our cash in the Cullen super fund does nothing to lift New Zealand's growth rate. Tax cuts would.

That is why Act remains committed to returning the Cullen fund to hard-working people by dramatically lowering taxes. Dropping taxes would boost growth and plough more money back into household budgets.

What we have now is a rich Government and a poor people. When I released the Minister of Finance's own figures on average household income and tax take, the minister refused to accept them.

Michael Cullen instructed Treasury to recrunch them. However, the story didn't get any better. The reality is that in real terms households are worse off.

Under this Government, higher taxes and higher prices have squeezed hard-working people. The average household four years ago earned $60,560 gross. That income has increased $7700 in the past four years. That's not bad.

But Helen Clark's greedy Government has taken a full $5200 of that increase in extra taxes, according to Dr Cullen's reworked figures.

It gets worse. Inflation over that time has devalued the dollar's purchasing power by more than 10 per cent, meaning in real terms the average household is more than $1700 worse off than it was four years ago. That's why hard-working people are struggling.

Meanwhile, the Cullen fund is sucking out an equivalent of $1400 a year for each household and at the same time each household has $5000 tied up in the Government's historic $7.4 billion surplus.

Too much is going into Government coffers. It is time it gave the country a bonus. This year was the perfect time for the Government to cut tax. It didn't; it stuck with its confiscatory and unnecessary tax rates.

The Government has been the lucky beneficiary of growth. But it has opted to milk it rather than try to expand the cake. It has milked it by raising the top tax rate to 39c and by introducing or increasing more than 20 levies or charges - despite promising no new taxes.

Act believes in encouraging and rewarding hard work and enterprise. Under it, the maximum tax rate would be 20c in the dollar - setting New Zealand on a higher growth path through stimulating investment, work, enterprise and saving.

Act is determined to drive up all New Zealanders' standard of living. It wants to see more money in everyone's pocket. That is the message I will be selling on the hustings over the coming months.

Hard-working people deserve a lot better than another three years of Helen Clark presiding over low growth, high taxes and politically correct nonsense.