Shearer not ready to drop higher pension age just yet

Friday 4th May 2012

Labour Party leader David Shearer has adopted National Party policy by promising not to resume New Zealand Superannuation Fund contributions while the government runs deficits, but wants discussion on his party’s proposals to raise the pension entitlement age.

In a policy speech in Wellington, Shearer acknowledged Labour had done a poor job of signalling its intention to raise the age of entitlement for the pension to 67 from 65. But he stopped short of scrapping the policy, which post-election analysis suggests was a key factor in Labour's defeat at last November's general election.

"The reality is that over the next 40 years the cost of Super will double," said Shearer. "Any government has to come up with a credible way to pay the bill", especially as there would be only 2.4 workers per retired New Zealander in 40 years' time, compared with 5.6 today.

"If we don’t make changes, it could cost $100 billion over 30 years,” he said. “Imagine how many zero budgets we’ll be having then."

Shearer said such an outcome risked divisively pitting young and old against one another.

"We are willing to discuss this openly and across all political parties – because it’s such a tough decision and deserves the widest consensus," Shearer said, who also confirmed Labour will continue to pursue a capital gains tax, believing it will spur productive investment.

He also announced that one of the policies Labour attacked National on during the last term of Parliament will now also be its own.

"Labour went into the election with a fiscal policy that would have seen us borrow more in the short term, return to surplus in the same year as National, then run larger surpluses and pay down debt more aggressively," said Shearer. "New Zealanders told us they were uncomfortable about the rate of borrowing.

"We have listened. We’ve decided that until we are back in surplus, any new spending will have to be paid for out of existing budget provisions, new revenue, or by re-prioritising," he said.

BusinessDesk.co.nz

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