In an interview with TVNZ's Jack Tame, Labour's Chris Hipkins mislead Tame & five million New Zealanders about the economic implications of population ageing, which he states requires imposing capital & asset taxes.
Hipkins says, “The big question is what happens with the
working-age population. If it stays the same & the population over the age
of 65 grows then yes we will [have to increase the percentage of tax revenue
compared to GDP] .. We have to be honest about that. Let’s go back 10 years,
there are now 200,000 extra people over 65 .. there’s another 400,000 that’ll
be there in the next 10 years. That means our population over 65 will have gone
from 14% to 21% .. You can’t say to people over 65 that we can give them everything
that we gave them when they were 14% of the population and not increase
government spending – the maths just doesn’t add up.” What. Bollocks.
Hipkins uses the word "honest", but what he
says is dishonest. Many nations face ageing populations. NZ's fertility rate
ranks as higher than many, at 1.7 per woman. By contrast, Singapore's is only
1. The Straits Times reports, "Singapore's population is ageing
rapidly, with the proportion of citizens aged 65 & above increasing to 18.4
per cent in 2022". How is Singapore dealing with this issue?
Fantastically - many scientific articles are lauding how its over-65's are
doing. Hipkins says the "maths" shows population ageing must
require higher taxes & government spending. He prefers capital & asset
taxes (but not for Māori authorities which he wont dare tell anyone since that
would mean an end to parliamentary sovereignty). Is he telling the truth? No.
How come? Compare Singapore's taxes with NZ's. Its GST rate is 9%, top income
tax rate 24%, corporate tax rate 17%, and tax revenues as a fraction of GDP
(which Hipkins says must rise in NZ to pay for population ageing) are around
half our level.
How did Singapore do it? Hipkins misled Kiwis by not telling
how a bunch of other nations solve this issue by using funded social security
systems (with the savings of their people). Instead of paying many welfare
bills with taxes, individuals have savings accounts for their retirement,
health & housing needs. In Singapore these funds are invested by the
State's Central Provident Fund, earning returns on equity markets. The current
NZ welfare system is different. Its "Pay-As-You-Go". When public
funding runs dry, like now, there are few personal savings to use, and our
government resorts to higher taxes and borrowing as we "go"
along. Contrary to Hipkin's mathematically & economically illiterate
musings, "the maths" of welfare with an ageing population adds
up in Singapore, even with taxes half of ours, since people enjoy compounding
returns on savings accounts that fund many of their welfare needs. Can it work
here? Yes. Together with a former Finance Minister, I did a full NZ plan & prepared budgets to 2035. Seems
Hipkins doesn't know how it works, even though some in his caucus have talked
to me about it, without his knowledge, it seems.
Sources:
https://www.1news.co.nz/2024/09/08/full-interview-chris-hipkins-on-labours-tax-policy-pivot/
4 comments:
Does Singapore also support and encourage a huge number of solo mothers and support other persons who have ensured their education is so lacking they can easily evade work? The world is awash with Funds and prone to collapses which have ruined many Americans in the past. The price of gold indicates widespread lack of confidence. Our whole system seems to lack logic. Those who provide for themselves may live to expend all, but often the habits which accumulate wealth discourage spending. Or it is spent off shore.And if they die before assumed 90 or whatever, as most do, their efforts largely wasted, except for family if they have any. With now late families inheritance often too late to be fully appreciated . When the world eventually operates to limit climate change and trims consumerism surplus earnings and profits susceptible to tax are likely to hugely reduce.
A quick and easy answer to New Zealand's pension payment problem is to increase the retirement age to 70.
While this should have been done 10/15 years ago it can still be done over 20 years starting from 1 April 2026 and this gives enough time for the necessary legislation to be passed through Parliament.
But he's a politician!! Surely you don't expect honesty from anyone in that "profession" do you?
Way back when, I was a contributor to the compulsory super scheme. Our old mate "piggy" Muldoon scrubbed it saying it would become too powerful financially. We know this to be true in some other countries who have compulsory super schemes.
Why we did not create a new scheme beggers belief.
Politicians too scared to upset the population with anything
compulsory. (Covid and tax aside)
What a waste.
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