If your income is down in the recession and you are taking on debt to maintain the family's living standard, would you borrow a bit more to put into a superannuation fund?
Nor would I. Nor would John Key, Bill English, Phil Goff, Jim Anderton or Peter Dunne, I suspect. Sometimes the simplest decisions test the mettle of those who lead us.
With the public accounts in deficit, it dawned on someone this week to ask whether the next Budget could make the usual contribution to the Cullen fund for superannuation. Key and English hedged.
English said the question had yet to be seriously considered. Anxiously he added that a suspension of contributions would not affect payments to superannuitants. "The national super entitlement is absolutely written in stone," he said.
Goff, smelling fear, declared Labour opposed to suspension and called on the Government to make its position clear. Anderton called it "raiding the piggy bank". Dunne, minister of tax collecting, declared it "a very bad idea".
All of them know it would be sensible. Dunne even admitted it.
"I can understand the economic reasons for doing so but it opens up the whole super debate yet again."
A politician worth a ministerial salary does not shrink from a decision that might be wilfully misrepresented.
I should forgive Goff and Anderton their political opportunism; they need attention and their pickings are lean at the moment, though I had thought better of Goff.
The Green's co-leader Russel Norman has no part in National's Government (yet) but was able to take the responsible view. Only the Greens and Act could immediately support a suspension so eminently sensible that the question should not arise. Since it has, forgive me for stating the obvious but someone must. The NZ Superannuation Fund was set up five years ago by Michael Cullen when he had surplus tax revenue. It makes sense only when there
is a surplus.
Cullen decided to put $2 billion annually into an invested fund that might help future taxpayers bear the cost of the baby boom's pensions. It was one of the best things he did. The post-war baby boom is a fearful demographic bubble moving rapidly towards retirement. Those born at the beginning of it will qualify for the pension the year after next. The biggest numbers will be in retirement in the 2020s. All going well, the Cullen fund might pay a small
proportion, perhaps 14 per cent, of their pensions.
The rest will have to come from the 2020s' taxpayers, children of the baby boomers. And they will have to pay it because the retired population will be voting in unprecedented numbers and no government will dare cut its pensions.
National opposed the Cullen fund, and Act I think still does, on a good principle. They believed future taxpayers would be better served by using the surplus to give the present generation a tax cut that could strengthen the economy.
Normally I'm sympathetic to the idea that people invest their own money more usefully and reliably than those who invest taxation. But most private savings in this economy go into tax-favoured residential property rather than productive activities. So it made sense to save the surplus in a public fund.
I'm not sure whether National came around to that view, or whether it was reconciled to the fund just to duck the issue before last election. It ducked most arguments by promising to maintain Labour commitments, and cut taxes too.
But neither party was asked whether they would continue Cullen fund contributions from a Budget in deficit. The question is absurd if it is remembered that the whole point of the fund is to help future taxpayers.
Deficit adds to the debt loaded on future taxpayers, unless inflation erodes its value in the meantime. Either way, its a thankless legacy.
To increase public debt by a billion dollars and put that money in a superannuation fund risks presenting our tax-paying children with costs that could exceed the fund's earnings on that sum.
A decent leader should be able to say so.
The reason English hedged may be just that the Cabinet had not discussed the suspension, or it may be a matter more awkward. National plans to cut taxes this year and maybe each of the following two years. Until late the eve of yesterday's job summit, there was no "maybe" about it.
With deficits likely to persist, on English's reckoning, for three to six years, tax cuts are as irresponsible as a superannuation contribution. Borrowing to reduce my generation's taxes as we load debt on to the next is doubly cruel.
The measure of leaders is their capacity to do what ought to be done, and counter any misrepresentation of what they have to do.
This Government has yet to pass the test.