12 December 2000

National Paves The Way For Rational Debate On Superannuation

Opposition Leader Jenny Shipley today announced that National will support the introduction of the Government's proposed new superannuation scheme to Parliament, ensuring it will be sent to a select committee.

"Both National and Labour now agree that existing arrangements for current retirees must not be changed. This is a situation which has not existed for many years and which gives retired people certainty and confidence for the future. Their payment levels, relative to the average wage, will not change. The entitlement criteria will not change. Both major political parties are in agreement about these guarantees.

"The challenge now is to provide confidence and security for future retirees.

Mrs Shipley made it clear that National supports the select committee process in the hope that political consensus can be achieved on the design of a superannuation scheme. However no decision has been made on whether National will support the bill becoming law.

"We have severe reservations about Dr Cullen's scheme and there are a number of tests it must meet.

"We will work in select committee to ensure the scheme undergoes robust and thorough scrutiny. It will need to be able to withstand close scrutiny if the scheme stands any chance of being durable for a hundred years.

"Our particular concerns are:

* The scheme must be affordable. Is it realistic to rely on future governments delivering $2 billion surpluses consistently for 25 years running?

* The scheme must genuinely address the needs of an ageing population. Will the 14 percent of superannuation payments this scheme will meet at its peak be enough to ensure payments remain equivalent to their present level?

* The scheme must be durable. Can it survive for the better part of a century unchanged unless it secures cross-party support so that it can be entrenched?

* The scheme must not serve as a disincentive to private savings. Treasury has already signalled this as a concern about Dr Cullen's proposed scheme.

* Investment of the capital in the scheme must be made in accordance with best practise. Will the Government give in to pressure from the Alliance and the Greens to severely limit the proportion of the fund which can be invested offshore? The structure of this fund must be geared to maximise returns, not designed to placate the political needs of minority parties.

"During the select committee process we will be seeking the advice of respected economists, social policy agencies, the savings industry and other interested parties about the sustainability and durability of the proposed scheme.

"We will also be gauging their opinions on the likely effect this scheme will have on the economy. In particular we will be seeking advice on the impact that a $2 billion a year scheme would have on business, employment and economic growth. We will also seek to ascertain the relative economic impact of alternative strategies, such as corporate tax reductions or investment in the knowledge economy.

"At the end of the select committee process, if possible, we would hope to achieve consensus on a scheme which would be sustainable in political and economic terms.

"If it is not possible to support a scheme which emerges from the select committee process then the public can be assured that National would propose an alternative policy position so that the public can give it due consideration.

"Seeking to establish a scheme around which a political consensus can be formed is still our first goal," Mrs Shipley said.

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