Why grasp one of the third rails of politics just six months from an election? Well, three possible reasons come to mind...
The interesting thing about Bill English's out of the blue superannuation announcement is not the substance of the policy -- it seems mild enough -- but why he made it six months before an election. After all, the key part of the policy, the shift in the eligibility age from 65 to 67 does not even start for another 20 years.
John Key gained substatial support by guaranteeing no change to super while he was Prime Minister, an admission of the third rail effect of any change. So why on earth has Bill English made this move where others feared to tread? And why now?
There are three possible reasons for such an announcement so close to the election.
First, Bill English believes in honesty with the public. Part of being a careful steward of the books is dealing with known risks. The cost of National Superannuation will double as a percentage of GDP by 2060, with much of that increase occurring well before then. It would be imprudent as a sensible finance manager not to deal with this problem. The public have a right to know the reality of the choices well before the problem hits.
Second, English believes he will be rewarded in electoral terms by being honest. That some sector of the voting public who were sceptical of him, will now vote for him and for National. That of course is a contestable proposition, but we will certainly know in six months’ time.
The third reason is a bit more cynical. English needed policies that he could readily trade away in coalition negotiations. That this is a credible reason is plain on its face. The legislation would not be introduced until next year. It contains one element that will have considerable appeal to New Zealand First, a more than likely coalition partner. The shift for eligibility for immigrants from 10 years to 20 years is exactly what Winston Peters has been calling for.
The reality of the announcement is that the public are now talking about superannuation policy. This is likely to continue through to the election. Announcing such a policy this close to the election has the effect of hardening the positions of all political parties. The election period is not a time for a careful and considered debate, with the hope that a consensus will emerge. That typically occurs in the year or so after the election. In the case of superannuation this can now only occur if National forms the government.
Virtually all other parties have declared that age 65 is an immovable rock, so in the event that they form the government they will be bound by this electoral commitment. Thus only National could front a debate following the election. In practical terms they would need to be the leading party in government to do so. Even if the specific policy has been constrained by coalition agreements, the need to have a nationwide consensus on the issue would remain. The fact that the cost of super will double as a percentage of GDP by 2060 makes this an imperative.
In this case the policy choice by English to only start the shift in the age of eligibility in 2037 looks like a strategic decision in political terms. It is far enough away for a considered debate to occur, unlike the 1990’s when the shift from age 60 to 65 was foist on the public with no real opportunity to participate in ta debate.
In six months’ time we will know whether Bill English is a master in understanding the public appetite for such a debate. The implications go beyond superannuation. If he is successful he will feel empowered to promote other such debates. The decision could be the makings of one of the most thoughtful Prime Ministers of the last half century, able to lead the nation through the challenging social, economic, environmental and ethical issues that confront New Zealand.
We will know on September 23rd.