PAUL MCBETH: Manufacturing intent

Paul McBeth is the editor of The Bottom Line and Curious News, and previously worked at BusinessDesk for 15 years. His KiwiSaver has been with Milford Asset Management since 2014 and he rents from a private landlord in the Auckland CBD.

Outgoing Retirement Commissioner Jane Wrightson lobbed a grenade Parliament’s way in her swansong assessment of the nation’s retirement policies – set aside your partisan games and come up with a lasting deal on superannuation.

A cynic might point her to prime minister Christopher Luxon’s softening up the electorate to selling assets and the kneejerk reaction from Labour’s Chris Hipkins all but saying buyers would have to pry them from his cold dead hands to get their greedy mitts on them as to the outcome of asking why we can’t all get along.

Politicians are going to politick – no ifs, no buts, no maybes, to steal the late Jim Bolger’s broken promise to ditch the unpopular superannuation surcharge in the early ‘90s.

But she might have a point.

Superannuation is the single most expensive line item in the government’s ever-expanding income statement and for the public it’s a key plank to how they might plan for their golden years – even if it’s simply a backstop to keep the wolves at bay for a life largely lived.

When things change, it’s less likely to create social upheaval if there’s a long lead-in for people to plan accordingly rather than feel like they’ve had the rug whipped out from underneath them.

Study becomes insight

Of course, we’ve been here before.

As the Retirement Commission’s report reminds us, in 1993 there was a cross-party accord signed by Labour, National and the Alliance – remember them? – that established the commission and recognised the need for long-term agreement to maintain public trust after a couple of decades of political contortions and backflips.

Which was fine until it wasn’t.

We wax lyrical about KiwiSaver and the New Zealand Superannuation Fund now, but they weren’t the result of a kumbaya moment descending on Wellington where politicians of every hue held hands and welcomed in a new era of a shared vision for the country.

The arguments were bitter and insults were thrown back and forth in the usual way by our elected representatives.

And there’s nothing to stop a future parliament and government from changing their minds – that’s the art of politics.

The witness of change

For all the bluster about keeping the politicians honest, the commission’s report provides some useful nudges that might raise the hackles of staunch defenders of the sacred cow to keep super simple and universal.

Because as it stands, our very simple system isn’t really fair to future generations, who will probably face reduced services and higher taxes – the opposite of what New Zealanders typically want from their various governments.

And even the short-term recommendations put forward by Wrightson are targeted interventions to bolster private KiwiSaver savings for groups likely to need a little extra oomph to avoid facing financial stress in later life, such as those on low incomes, parents or caregivers.

Putting greater emphasis on targeted superannuation – we mustn’t call it means or asset testing – would itself be a major shift in policy direction and probably warrants a much wider accord than just that of political parties.

But more to the point, it raises the still curlier question about the wider role of government.

Is superannuation essentially a universal basic income or is it a safety net for those whose private savings – principally through KiwiSaver – aren’t enough to keep them off the poverty line?

Rage is relentless

Because if politicians and the public at large can’t answer that question, then it does a huge disservice to the 3.4 million KiwiSavers out there.

Much like the baby boomers, they’re basing their investment decisions on the existing social contract that they’ll collect a pension indexed to wages and inflation once they turn 65.

Sure, some of us might be a little sceptical about whether it will still be universal by the time we come of age but until a decision is made either way, it will continue to feed into our immediate decisions given the here-and-now is always more pressing than a few decades hence.

Or more simply, that’s future Paul’s problem.

Check the interior

As an example of that kind of decision-making, take a look at the recent KiwiSaver first-home withdrawals.

In the 12 months ended Oct 31, about 46,650 people tapped their KiwiSaver accounts to pull out $2.03 billion – roughly $43,400 each – to qualify for a first-home loan underwritten by Kāinga Ora that lets them buy a house with a 5% deposit. That’s up from $1.58 billion withdrawn by about 40,200 people a year earlier, or an average $39,400.

We can argue the toss about whether a savings scheme intended to help maintain people’s living standards when they retire should be diverted into fuelling the housing market, but that’s the problem with trying to find a shared vision on a single topic – nothing’s ringfenced when it comes to the public purse.

And any policy discussion done in isolation runs the risk of those very real unintended consequences that we all try to sweep under the carpet when pushing our favourite barrow.

Because that’s another part to the art of politics: trying to say there’s never an opportunity cost to every single shiny bauble they dangle in front of the people who vote them into office.

 Image from Ambre Estève on Unsplash.