Asked what he would recommend by way of addressing the vexed issue of retirement income, Eaqub proposed raising the age of eligibility for NZ Superannuation to 70 years-of-age, and subjecting every applicant to a means test. Writing on the same subject for Stuff back in 2018, Eaqub further suggested making Kiwisaver compulsory and dramatically increasing the contributions from employers and employees. He was also of the view that his proposed means-testing regime would need to: “test assets and would be a natural complement to a tax regime that taxes capital as well as income and spending.”
As the National Party were quick to point out in relation to Grant Robertson’s proposed social insurance scheme (now on hold by order of Chris Hipkins) the sharp increase in deductions from workers’ pay packets required to make Kiwisaver a viable alternative for NZ Superannuation will be experienced by most employees as just another tax. It is unclear from his Stuff article whether Eaqub’s proposed Capital Gains Tax will be applied to the family home. If that is the plan, however, then the impact on asset-rich/cash-poor retirees could be catastrophic.
At the core of Eaqub’s proposals is a puritanical belief that citizens have no entitlement, morally, to an income they haven’t saved for. And that NZ Superannuation – currently paid for out of the steady growth of the New Zealand economy – is a violation of intergenerational equity. On The Nation, he railed against the fact that “very wealthy people” continue to receive NZ Superannuation. In a world run by Shamubeel Eaqub, this outrage would, presumably, cease. “Very wealthy” people’s entitlement to “Super” would be means-tested into nothingness.
Radical stuff! But also a plan guaranteed to provoke an extreme political backlash if implemented. Indeed, so vociferous would the reaction to Eaqub’s proposals be that it is difficult to see them being introduced in any other circumstances than those arising out of a full-scale intergenerational war.
If that is what Eaqub wants, if his plan really amounts to nothing more than the meting out of what he and his generation consider a well-deserved generational punishment, then they will have singled themselves out as a very dangerous generation.
When, however, Eaqub’s argument is pulled apart, older New Zealanders may feel entirely justified in arriving at such a grim judgement. Take, for example, Eaqub’s claim that the universality of NZ Superannuation “makes the system simple to administer, but expensive.”
Expensive compared to what? The cost, of New Zealand’s universal basic income for the over-65s, measured as a percentage of GDP, is predicted to top-out at between 7-8 percent. But, that is the cost of the German pension scheme right now! What’s more, as New Zealand moves beyond its Peak-Boomer moment, and the generation dies out (as all generations do) then the cost of NZ Superannuation will fall.
It is at this point that the reckless quality of Eaqub’s argument becomes most apparent. As the Baby Boomers disappear into the historical shadows, the Generation Xers will start to view their retirement with a mixture of trepidation and horror. In their determination to punish the privileged and selfish Boomers, Gen-X politicians, inspired by the likes of Eaqub, will have replaced the generous universal pension of yesteryear with a means-tested grant that kicks-in only after they reach their seventieth birthday. Moreover, the Kiwisaver “nest-egg”, for which they have been required to defer so much personal and familial gratification throughout their working lives, will offer them a weekly payment barely equivalent to the purchasing power of their parents’ and grandparents’ Super!
To make matters worse, it turns out that Eaqub’s fingering of the Baby Boom Generation as the villains of his puritanical economic narrative for The Nation is just plain wrong.
More than 30 years ago, an academic by the name of David Thomson, wrote a book called Selfish Generations?: The Ageing Of New Zealand’s Welfare State. Born in 1953, Thomson is a fully-paid-up member of the Baby Boom Generation. Did that mean that his book was a sinister blueprint for the dispossession of the Boomers’ own children? Did it heck as like! In a fashion echoed uncannily by Eaqub, Thomson railed against his parents’ generation:
In New Zealand the big winners in this have been the ‘welfare generation’ – those born between about 1920 and 1945. Throughout their lives they will make contributions which cover only a fraction of their benefits. For their successors the reverse is true.
Eaqub’s fatal weakness is that, like so many economists, he is not particularly well-versed in his country’s recent history. Clearly, he has no idea that it was Baby Boomer politicians who did their best to rein-in the cost of retirement income support. Between 1990 and 2000, these efforts transformed the Super issue into an electorally devastating political football which ended up scoring own-goals against both major parties. It was, Eaqub seems not to grasp, Boomer politicians who made sure the retirement age rose from 60 to 65. Boomers, too, who set up the Superannuation Fund to ease the nation through its Peak Boomer period.
Eaqub is not, of course, alone in his generational ferocity. There are plenty of other Gen-X commentators who are happy to join in the Oedipal dance. If these characters spent as much time blaming the neoliberal order (put in place by individuals born far too early to be branded Baby Boomers) as they do to bad-mouthing their parent’s generation, then something considerably more positive than gratuitous age-baiting might ensue.
A more fruitful place to seek for inspiration than Eaqub’s arid blame-game is on the streets of Paris and many other French cities and towns. It is there that young Frenchmen and women are fighting running battles with riot police to protect the French retirement age of 62, and the state pensions that come with it. They do not begrudge their parents’ good fortune. On the contrary, they are fighting tooth-and-nail to ensure that it remains their good fortune as well.
Those Gen-Xers who thrilled to The Nation’s intergenerational blame-fest, should turn their attention, instead, to just how much Shamubeel Eaqub’s ruthless prescription on pensions, and that of France’s technocratic and neoliberal president, Emmanuel Macron (b.1977) have in common.
Chris Trotter is a political commentator who blogs at bowalleyroad.blogspot.co.nz.
As the National Party were quick to point out in relation to Grant Robertson’s proposed social insurance scheme (now on hold by order of Chris Hipkins) the sharp increase in deductions from workers’ pay packets required to make Kiwisaver a viable alternative for NZ Superannuation will be experienced by most employees as just another tax. It is unclear from his Stuff article whether Eaqub’s proposed Capital Gains Tax will be applied to the family home. If that is the plan, however, then the impact on asset-rich/cash-poor retirees could be catastrophic.
At the core of Eaqub’s proposals is a puritanical belief that citizens have no entitlement, morally, to an income they haven’t saved for. And that NZ Superannuation – currently paid for out of the steady growth of the New Zealand economy – is a violation of intergenerational equity. On The Nation, he railed against the fact that “very wealthy people” continue to receive NZ Superannuation. In a world run by Shamubeel Eaqub, this outrage would, presumably, cease. “Very wealthy” people’s entitlement to “Super” would be means-tested into nothingness.
Radical stuff! But also a plan guaranteed to provoke an extreme political backlash if implemented. Indeed, so vociferous would the reaction to Eaqub’s proposals be that it is difficult to see them being introduced in any other circumstances than those arising out of a full-scale intergenerational war.
If that is what Eaqub wants, if his plan really amounts to nothing more than the meting out of what he and his generation consider a well-deserved generational punishment, then they will have singled themselves out as a very dangerous generation.
When, however, Eaqub’s argument is pulled apart, older New Zealanders may feel entirely justified in arriving at such a grim judgement. Take, for example, Eaqub’s claim that the universality of NZ Superannuation “makes the system simple to administer, but expensive.”
Expensive compared to what? The cost, of New Zealand’s universal basic income for the over-65s, measured as a percentage of GDP, is predicted to top-out at between 7-8 percent. But, that is the cost of the German pension scheme right now! What’s more, as New Zealand moves beyond its Peak-Boomer moment, and the generation dies out (as all generations do) then the cost of NZ Superannuation will fall.
It is at this point that the reckless quality of Eaqub’s argument becomes most apparent. As the Baby Boomers disappear into the historical shadows, the Generation Xers will start to view their retirement with a mixture of trepidation and horror. In their determination to punish the privileged and selfish Boomers, Gen-X politicians, inspired by the likes of Eaqub, will have replaced the generous universal pension of yesteryear with a means-tested grant that kicks-in only after they reach their seventieth birthday. Moreover, the Kiwisaver “nest-egg”, for which they have been required to defer so much personal and familial gratification throughout their working lives, will offer them a weekly payment barely equivalent to the purchasing power of their parents’ and grandparents’ Super!
To make matters worse, it turns out that Eaqub’s fingering of the Baby Boom Generation as the villains of his puritanical economic narrative for The Nation is just plain wrong.
More than 30 years ago, an academic by the name of David Thomson, wrote a book called Selfish Generations?: The Ageing Of New Zealand’s Welfare State. Born in 1953, Thomson is a fully-paid-up member of the Baby Boom Generation. Did that mean that his book was a sinister blueprint for the dispossession of the Boomers’ own children? Did it heck as like! In a fashion echoed uncannily by Eaqub, Thomson railed against his parents’ generation:
In New Zealand the big winners in this have been the ‘welfare generation’ – those born between about 1920 and 1945. Throughout their lives they will make contributions which cover only a fraction of their benefits. For their successors the reverse is true.
Eaqub’s fatal weakness is that, like so many economists, he is not particularly well-versed in his country’s recent history. Clearly, he has no idea that it was Baby Boomer politicians who did their best to rein-in the cost of retirement income support. Between 1990 and 2000, these efforts transformed the Super issue into an electorally devastating political football which ended up scoring own-goals against both major parties. It was, Eaqub seems not to grasp, Boomer politicians who made sure the retirement age rose from 60 to 65. Boomers, too, who set up the Superannuation Fund to ease the nation through its Peak Boomer period.
Eaqub is not, of course, alone in his generational ferocity. There are plenty of other Gen-X commentators who are happy to join in the Oedipal dance. If these characters spent as much time blaming the neoliberal order (put in place by individuals born far too early to be branded Baby Boomers) as they do to bad-mouthing their parent’s generation, then something considerably more positive than gratuitous age-baiting might ensue.
A more fruitful place to seek for inspiration than Eaqub’s arid blame-game is on the streets of Paris and many other French cities and towns. It is there that young Frenchmen and women are fighting running battles with riot police to protect the French retirement age of 62, and the state pensions that come with it. They do not begrudge their parents’ good fortune. On the contrary, they are fighting tooth-and-nail to ensure that it remains their good fortune as well.
Those Gen-Xers who thrilled to The Nation’s intergenerational blame-fest, should turn their attention, instead, to just how much Shamubeel Eaqub’s ruthless prescription on pensions, and that of France’s technocratic and neoliberal president, Emmanuel Macron (b.1977) have in common.
Chris Trotter is a political commentator who blogs at bowalleyroad.blogspot.co.nz.
14 comments:
It does strike me as odd that a multimillionaire gets Super the same as a pauper....... Robin Hood in reverse when you consider how hard up many taxpayers are.
Why not get people to buy their old age pension? Make it mandatory to do so. Perhaps make everyone buy a pension at the minimum wage rate with an option to buy a better one.
This would serve the idea of natural justice a lot better, methinks.
My wife and I spent most of the past 45 years out of NZ. We are now back and living in retirement but we don't get Super for at least 5 years and then, given mooted changes, it'll be 'let's see what happens'. It might have been different had I had the 'buy it' option as an expatriate as do e.g. UK citizens residing outside.
Barend - you find it wrong that the millionaire gets super, yet after 45 years working overseas have no problem with taking something you didn't pay into? Interesting thought process.
Strange! We had, I thought, a tax on superannuation some years ago which was eventually dropped. I don't ever see this being referred to in the discussions, nor the reasons why it was discontinued. This effectively made it the equivalent of means tested super scheme. We've been there and done that, it seems.
If Robert Muldoon had kept his grubby little hands in his pockets, we would have no need to even talk about super, we would have one of the most successful super schemes in the world.
Shamubeel Eaqub is a dangerous person.
I am thankful for the pension and being still active and alert believe I should show my appreciation by doing constructive things for society.Not just playing games or going on tours and cruises.
Even if it is just growing fruit and veges for the food bank.
Between the ages of 60 and 80 years my parents lead what I consider to be an exemplary life style. My mother taught hundreds of children to read phonically, charging the same rate as the minimum pay rate or less for those in hardship, while my father wrote papers for conferences (no pay) on his specialist area. Our society is full of problems and suffering and certainly there are many voluntary groups who do good stuff but I think those fit old folks who fritter away their time on self indulgent and worthless activities should have their consciences bothered.
Colin - perhaps you are thinking of Super schemes that were available to public sector personnel such as teachers and nurses; not the same as Universal Super.
CXH - I didn't have the option to buy into it. Nobody does. But if you're not physically present here, you can't claim the right to it until you've lived here X years (used to be 10, now going to 20). I would like to see a buy-in option for NZ citizens who turn become long-term expatriates outside NZ.
The current working age population should be warned that National Super is taxed, and displaces all additional taxable income (including rents & dividends) into the second, third, fourth 0r fifth tax bracket. Furthermore, boomers who still have student loans outstanding find that super consumes most of the income threshold for compulsory repayment of their loan at (12% of taxable income over $22,828). Thus, the ‘wealthy’ may well be paying much more than their super in tax, and even those who hoped to retire in modest comfort may have some surprises ahead.
Quote from "Retirement Income in New Zealand:the historical context" document,
"In 1985 the fourth Labour Government introduced a taxation surcharge on theother income of National Superannuitants. While this was not legally an income test,
it had a similar effect."
Oh he sounds a darling. I'm so glad I don't have any children. I have some nieces maybe they get a gift upon my eventual death, that is if it's not overly taxed. I'll check that before I depart.
Next they'll be suggesting that we can always chose to check out early so as not to be a drain and what if there was a terrible pandemic? And it affected old people? Then there could be a vaccine that had extraordinary side effects.
And perhaps we could start castrating and neutering our children, because that would be beneficial, for the greater good. Oh wait, what we really need is a good war. Something we can really start killing and it'd all be sanctioned. For the good so to speak, well for someone.
Now tell me how many people believe this guy? That's why I left so many gullible people. How many billions are we up for now from our gen X govt.? Because that's why we LOVED I mean arohanuied our youth adjacent Jacinda. Becsuse she said we had lots of money! Just lots and lots! So glad about that.
So me and my spouse we decided to sell up and leave, get the hell out before they get us. Bugger the pension, I think we'll manage. And I was told quite spitefully over the phone when I enquired that we wouldn't be getting any of it if we were thinking about returning either! Because why should we.
Now I remember as a young man in my 20s in the 80's, that was when we had real pandemics. Employment was in very short supply and wages were low if you were young. I thought they'd get better but no not really. My spouse had a good job in the mid 90's so we were able to buy a house. Later he injured himself and to get back to fitness again we travelled and rented our house acussed of being property owners etc... You know the sort of thing and we bought another house
even more despicable. We couldn't afford a builder so we renovated ourselves yet another deadly sin. BTW we knew what we were doing. Selling it was fascinating, so many people thought they should get it for cheap.You know Gen Xers or Y's, millenials what are we up to now?
So do not surrender to this egotistical psychopath. Gaslighting your demise. Ensure that you get to taste a bit of the good life because I am sure these people do!
I think I going to enjoy my more senior years, if I can just try to avoid the witch hunters I will be fine. We didn't end up being rich but we will make a living from what we have. They really are a miserable lot.
The French are not protesting just the retirement age increase. The current protests are an extension of the gilet jeunes movement and is a stand against all the dictatorial edicts delivered by the WEF class of 2016 alumnus Emanuel Macron.
Saving for retirement should be compulsory and perhaps with an elective graduated system (all overcoming the means-testing issue) and, if you unfortunately don't make it to retirement, then your estate should receive a lump-sum payment with regard to what you have contributed. That would be a fairer system, but what you do with those that have been on benefits (some generational), well, that will require further thought and discussion.
But that aside - all retirees should read and take heed of Gaynor's comment – well said! Retirees have a great deal to offer and those able-bodied will enjoy a great deal more fulfilment in their lives if they do something, whatever that may be, which helps others.
It is laughable that an "economist" is taking a swing at hard working people, if all economists disapeared tomorrow would they leave a vacancy?
Getting close to election again so all the nutters come out, these idiots are happy to take a swing at the baby boomers who worked hard for very modest return and made our country prosperious while supplying all the good things the generation x y or z take for granted.
Why dont they have a look at all the able non working ones on the dole or other fancy named schemes who have not paid tax or contributed in any way.170.000 on job seeker. 99.000 unemployed. 60.000 sole parents. While some of these are due to unavoidable circumstances and deserve as much suport as possible there are others who dont.
That is exactly right Last
Truth Standing. 👍
Another bloody immigrant trying to divide and destroy our society that our ancestors worked and fought to build. I'm 73, worked since I was 10 doing my paper round and mowing lawns so I know that I have contributed to creating our NZ therefore I deserve some comfort in my retirement. The amount of non NZers doing their best to stuff up what we have built up is disgusting, the Green Party list MPs for example. Kiwialan.
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