Super change should not wait 20 years

Not for the first time, Labour’s leader has been too quick to drop a contentious policy. First it was the capital gains tax, discarded by Andrew Little as soon as he came to the party leadership after the last election. Within six months he saw the Government activate a capital gains tax with a bright-line test. Now he has dropped Labour’s policy on raising the age of eligibility for NZ Superannuation — only to see the Prime Minister announce an increase yesterday.

It is a very distant increase. National proposes to raise the age to 67 from 2037, which means it will not affect anyone born before July 1972, and legislation will not be introduced until next year. So the Government is clearly putting the decision to the voters at the election in September. If raising the age of NZ Super is the electoral dynamite that Andrew Little clearly fears it might be, National is in trouble. But more likely, the timing of the rise is so distant that it will not disturb the electorate and it is Labour that will need to review its position now.

Nine years ago an Opposition leader on the cusp of power made a timid promise not to change the terms of entitlement to national superannuation as long as he was Prime Minister. Last weekend a television interviewer put the same question to Bill English. To his credit, English did not paint himself into the same corner. Not so Little, who said, “A Labour Government I lead will not raise the entitlement age for superannuation and we will restart contributions to the NZ Superannuation Fund.”

The difference is that this time the Opposition leader is not quite on the cusp of power. In 2008 National had been leading in the polls for a year and Labour was resorting to dire warnings about what a National Government might do. This time the Opposition party is still well behind in the polls and National can run on its record. It has no need to resort to scare tactics which would cause the voters to contemplate a Labour-led Government.

This time the Opposition leader did not face the same fear-mongering on the subject of superannuation. In fact, the Prime Minister had presented him with a golden opportunity to keep his options open in the event that Labour should win the election.

English had said he had not made the same commitment as John Key so there could be “a bit of a reset”. He added, “We would not anticipate any drastic change . . .” Little found these comments “dithering”, which was true, and urged English to “come clean”, which English did after the Cabinet meeting yesterday.

The change they have announced is certainly not drastic. The first baby boomers, born in 1946, are now 70. Many of them did not retire at 65, they continued earning a good salary as they drew the pension. It is no excuse to say their taxes offset their pension. On the incomes they earn they ought to be paying the same tax as younger people.

Modern health services are helping most people to stay fit and well enough to work past the age of 65 and live on average well into their 80s. To be fair to younger taxpayers, raising the age of eligibility should not be delayed another 20 years.