New Zealand Superannuation Bill – 1st Reading Hon Richard Prebble Speech
Thursday 14th Dec 2000 Richard Prebble Speech -- Economy
I rise on behalf of the ACT party to discuss and debate the introduction of the New Zealand Superannuation Bill. It is a
bill to establish a fund to be administered by an independent board of trustees in order to provide an amount of money
to assist in the payment of State pensions.
The ACT party intends voting for the introduction of this bill. Let me make clear the basis on which we are doing so.
The first is this: is the present superannuation scheme sustainable? Can we pay out of taxation an adequate pension to
future retirees? The fact of the matter is that when the baby boomers retire, and they will start retiring in a decade's
time, the number of people who are retired compared with those who are working will change dramatically.
It will be very difficult for the State to be able to pay a pension that is the equivalent of the present pension. That
is a fact that is widely known. It is an issue that has been facing this Parliament. We have known about it all of my
adult life. For that reason, the ACT party is prepared to support this measure, because at least this Government is
acknowledging that this is a problem and it is putting up what it thinks may well be a solution. That is constructive.
In fact, for more than 20 years the electorate has been asking this Parliament to try to get some bipartisan agreement
on superannuation, because people understand that if this is a matter of party politics and keeps changing every few
years there is no security in anybody's retirement. I am pleased to say that the party I lead has consistently said that
we are prepared to sit around the table with other political parties to try to get as much consensus as we can.
The only way we can do that with this Government is from this bill, because it has said: “Yes, we'll talk to you, but
only on our terms. Here is our bill. You come to the select committee and we will talk there. No, we are not prepared to
meet without preconditions to all parties.'' I say to the Government that that is a shame, because it ought to have. We
should have sat around the table.
I also say to the Labour Party that its record on superannuation is not one that it can be proud of. It has played the
superannuation card when it has suited it. The Labour Party was quite happy to rip up the accord, to use it last
election, and say to superannuitants: “Here's another $20.'' without having come up with any plan on how that could be
Having said that about the Labour Party, of course, the National Party's record on superannuation is a matter of shame.
Sir Robert Muldoon's scheme was the biggest political bribe of all time, unsustainable, and we are still paying the
debts that we accumulated at that time to pay for that unsustainable scheme.
After Jim Bolger used superannuation in order to get power, he then did try to get an accord. The difficulty was that
the accord was not one that had involved the public. Having said that, the ACT party says: “Yes, let's do it.'' We have
a duty to examine the proposals that are being put in front of us. I have some real concerns about the way in which this
scheme is put together and the statements made by Dr Cullen about it.
First, the scheme is not a savings-based scheme. It is just a scheme where we will tax extra for 20 years to help lower
tax for the next 20 years. It is extra tax. When the Government says that it is taking the money from surpluses, that
sort of implies that this is a free lunch. We have a duty to say to voters that it is not a free lunch. Surpluses are
taxes that could be spent on hospitals, schools, or given back to New Zealanders whose money it is, but instead they
will go into a fund.
Indeed, Dr Cullen is committing not just this Parliament but future Parliaments to extra taxation. That is the first
The second point is the size of the fund. If $2 billion a year goes into that fund, in today's dollars, it will grow to
$50 billion. That is half of the total size of New Zealand's economy. That is enough money to buy every single share in
every public company in New Zealand and still have some change left over. That fund will be controlled by politicians.
Members can say that it will have an independent board of trustees. We have seen what has happened to independent
companies in New Zealand. Timberlands was an independent company. Its director, Kit Richards, wrote a letter, which the
Prime Minister did not like, he was fired. It was completely against the law. That shows how much independence there is.
Timberlands had statutory independence, but that was overturned. We have already heard from the Greens and the Alliance
that they will insist on the way the fund is invested. We as politicians know that politicians will not be able to keep
their hands off that fund; certainly, not a fund the size of $50 billion.
I put it to members that in an election year when the New Zealand dollar is not doing well and we can remember that
happening then the smart thing to do for the fund and for the benefit of the fundholders would be to transfer money out
of New Zealand prior to an election. Who believes that any politician would allow that to happen? Of course, they will
not. In fact, they would decide in an election year that it would be a good idea to invest it in certain marginal
electorates. Of course, we will see that, and that is what I fear.
Another matter no one looks at is that people talk about the distortions of building up such a fund, and it will be
enormous. Then we should think of the distortions of running it down. Running down a fund equal to half the economy over
20 years could cause a recession for 20 years.
I then ask members this question. Twenty-year-olds contributing to this fund will have to pay extra taxes for 40 years
only to discover that when they need the money, the fund is exhausted. The fund will run down to nothing. I cannot see
how a 20-year-old can say that the fund is a good idea. I tell Dr Cullen that that is a fatal weakness in his proposal.
If a person is under 30, there is nothing in the fund for him or her.
What should we do? To show how bipartisan I wish to be, I tell members that my friend the Rt Hon. Winston Peters has
made some very useful suggestions on superannuation. The House knows that Mr Peters and I do not agree about a lot of
things. So when we do agree about something, members ought to listen. Mr Peters points out that real security in savings
comes when the money is in a person's own name, when that person owns it, and not some politician, and when that person
is making the choices as to where it should be invested, and not some politician.
I say to the Government that ACT is prepared to endorse the scheme now. Rather, if it is not prepared to listen to the
public of New Zealand who might want the money in their own names, in funds of their own choice, then this will be
another scheme where we, as a Parliament, have failed the nation. I do not want to see that happen.
I would like to think that the Government can reach out and go for a scheme that the vast majority of New Zealanders can
support. The vast majority of New Zealanders want to see their fellow citizens have a secure retirement.