Universal benefits that don’t benefit us all

There’s an ad running on TV at present urging me to “share my Super”. I don’t think it is aimed only at superannuitants richer than me. I was born in the Baby Boom, raised in the welfare state, medicated and educated at little personal cost. I’ve had 45 years of full employment. My mortgages were inflated down rapidly and paid back long ago. With the help of employers’ contributions I saved a decent retirement fund.

Like many in jobs that are not physically taxing I had no wish to retire at 65 and didn’t. But I still put my hand out for the public pension as you do.

Had I put those personal savings into rental properties I might “need” the pension now to help cover my living costs, but I didn’t and I don’t.

I’m the beneficiary of a dubious principle called “universal social welfare”.

It’s embedded deeply in the DNA of the Labour Party. It’s the reason, for example, that the Government’s inflation relief for the low paid landed this week in the bank accounts of New Zealanders living overseas.

That’s what can happen when you parcel out money to everyone in a category of assumed need, regardless of their individual circumstances. Inland Revenue Minister David Parker argues the waste is worth it to save the cost of inviting people to apply for a payment and checking every application.

We’d become a poor country if that principal was applied to all forms of social support, which is basically what happened before the first Labour Government’s legacy of cheap housing loans, family benefits and other universal entitlements were withdrawn by the fourth Labour Government.

Even then, I can remember its Social Welfare Minister, Ann Hercus, and her staff arguing for universalism. They used arguments still heard today — that need-tested benefits did not reach all of the needy because some of those people did not know how to apply for them, and that universal benefits avoid a “stigma”.

It seems to me we can reasonably expect a minimum of civic awareness in fellow citizens. If you are hard up and struggling to keep a family housed, warm and fed, how hard can it be to find a social welfare office? It would be easier if they didn’t keep changing the department’s name every few years but even so, it can’t be too hard.

As for stigma, this sounds like something only the left-wing middle class worries about. If you are struggling to make ends meet and realise you may qualify for a meanstested benefit, I suspect a stigma is the least of your concerns. It is not a public announcement.

In any case, universalism seldom applies in social welfare today for people of working age or younger. It persists mainly in benefits for my generation where it’s growing. I’m also given free public transport and, now, winter heating payments for my power bills. There must be young families and students who need these more than I do.

The project “Share My Super” has a website offering a choice of recipients such as Women’s Refuge, KidsCan, Pillars (for prisoners’ children) and the First Foundation, which funds education opportunities. Privatising redistribution decisions in this way may be a good thing if public money goes to organisations that provide practical help rather than political noise.

But inevitably the decisions will be more sentimental and judgmental than those a properly advised government makes.

The post-war Baby Boom lasted 20 years. The first of these babies reached age 65 in 2011. Half of the boom is now receiving NZ Superannuation. Since the average 65-year-old is living to 82, the numbers on Super will continue to grow for the rest of this decade.

It’s looking likely to be a post-pandemic period of rising interest rates and flatter house prices, conditions in which fewer superannuitants might keep their wealth in property and more of the inflation-proofed public pension might be cash they don’t need.

Governments of both parties, meanwhile, remain prisoners to the most insidious rationale for universal superannuation — the idea that, without it, the well-off would not accept the high taxes needed to sustain the welfare state.

The generation that paid a top rate of 66c never gave up the notion they had paid for their pensions, though their tax had never financed a balanced budget in their working lives.

“Grey Power” has largely gone but its ghost still haunts our politics. The next generation, mine, elected governments that changed the economy for the better, but at a cost to the benefits and housing available to our children.

Their generation is in power now. They should not leave so much public wealth in our lucky hands.