The swarm of locusts that is the baby-boomer generation starts retiring this year, so we can delay no longer. The warnings from Treasury are scarily stark. It's time to grasp the question of retirement

In America they talk of the third rail; an issue so charged that to touch it is certain death, politically. It can refer to a number of issues, but most commonly it 's used to describe social security.

John Key may have learnt that lesson during his time in the US, because he's treated superannuation in the same fashion. It's sacrosanct, but the cries are getting louder -- that's got to change.

Key has promised more than once that he'll resign, both as prime minister and as an MP, rather than change the current entitlements around Super.

It's a move that's meant to make him look tough and decisive; instead it makes him look like a wimp. We need a government with the courage to grapple urgently with the question of retirement funding.

It's 2010, exactly 65 years since 1945. We no longer have the luxury of preparing and fudging and stalling on superannuation. The baby-boomers start retiring now, which means the first locusts are already landing on our crops, and behind them comes the swarm ready to devour our welfare budget. Yet our politicians are sitting there like the monkeys with their hands over their eyes, ears and mouth.

Treasury is making it crystal clear just how large the problem is. Sure, Treasury and welfare have hardly been bosom pals, so I take what it says with a truckload of salt. Yet Whitehead's comment at the weekend couldn't have been more direct:

"...you could afford to continue New Zealand superannuation, but what you can't afford is that plus all the other things that we're doing."

It's a stark choice that should grab our attention, and Mr Key's. The government's chief economic adviser is telling it that it can't keep its promise and continue with the welfare state as it is.

Rather than grasp that third rail, the government is looking at the other part of the equation; its Welfare Working Group kicks off next week looking at how it can save money in "all the other things that we're doing", which makes me very nervous indeed.

Whitehead undermined the conviction of his words when he also argued, on Q+A, against contributions to the super fund:

"Treasury's advice is to get your debt down first, and to get back to surplus, and that was part of the original act that was passed on the superannuation scheme.  Once we've done that our advice is yet get back into pre-funding."

In other words, "something must be done, er, but let's not actually start saving". Which is an interesting message from a outfit that wants us all to save, save, save. Do as we say, not as we do, Whitehead seems to be saying. Worse, the government's on the same page, having unwisely cut contributions to the Super Fund.

Fact is, paying down debt is not enough. Debt, like the poor, will always be with us. We need to save specifically for purpose.

And then we need to look hard at the agonisingly difficult question of who should get super and whether the age of eligibility needs to be raised from 65. The best arguments for and against stem from the same root point – proportionality.

As life expectancy increases, the year we spend on super are increasing as a proportion of our lives. So raising the age seems only practical and fair. Super was never intended to cover us for a fifth of our lives.

On the other hand, raising the age would mean that those who typically die youngest – the poor, Maori, Pacific people – would be hit hardest. If you only live to be 72, say, then raising the age to 67, as in Australia, amounts proportionately to a significant loss. Given that these are also the people who arguably have the greatest financial need, that seems counter-productive and unfair.

Means-testing? That would certainly be a mistake. Without a political stake in the scheme, it would be too easy for pressure to build to reduce or scrap it.

One thing we can probably all agree on is that the already retired need to be grandfathered through any changes (and that term has never been more appropriate!). And ordinary Kiwis approaching retirement need plenty of warning so that they can change their lifestyles and savings accordingly.

The tension pressing hard against that is that it's the baby boomers who will drain the most from the scheme, so as they hit retirement, we need to make the changes urgently.

History will recall that this is the year that the locusts arrived, so it's time to act. Does this government really want to be known as those who were on watch and did nothing? Or are they simply going to gut the rest of the welfare state to keep the same entitlements for the baby boomers? Tough choices ahead, but it's high time to start making them.

Comments (47)

by Graeme Edgeler on June 03, 2010
Graeme Edgeler

Means-testing? That would certainly be a mistake. Without a political stake in the scheme, it would be too easy for pressure to build to reduce or scrap it.

I'm not saying we shouldn't look at the age as well, but the idea that Jim Anderton (earning $145,000+ as a party leader, $240,000+ while a minister) deserves the pension (he's been getting it for the last 7 years or so) seem incontrovertibly wrong. Same with judges (retirement age 70) - including Supreme Court judges earning around $400k.

Means testing may not be the only solution, but not means-testing is just so wrong I can't see why anyone supports it - arguments over the level it cuts in at, and how harsh it is - sure - asset testing? I can see concerns - there are arguments both ways, but no income test either?. Maybe as an interim measure means-test from 65-70 or something like that, but still! Someone earning $250,000+ a year does not need the pension! Giving them the pension means others miss out (whether on better health care or whatever).

We don't all have to vote ACT to get this fixed, do we?

by Kyle Matthews on June 03, 2010
Kyle Matthews

I am sure that there is some reason based on human behaviour, but the fact that you can still earn the pension while working full time and earning megabucks seems strange. Shouldn't it function more like the unemployment benefit, where if you earn money it gets reduced, and if you earn lots of money you don't get anything? Why is it an entitlement?

by stuart munro on June 03, 2010
stuart munro

The current borrowing-based scheme was built on the assumption of a healthy growing economy. Given that predicate, there is no difficulty funding both retirement and social welfare.

The problem is that vested interests have found that they benefit from an unemployment rate of 5% or so, and the present government did not react to a UE rate of 7%. The unemployed, and people not in steady work, cannot save. Inflation in entry-level property prices has also reduced low or unstable income earners' ability to save. (causing a 20% drop in home ownership over the last 20 years)

So, we should retain the current retirement age, or lower it, and maintain the full entitlement. But the government should follow monetary and fiscal policies that create and sustain growth and correct our current trade imbalances. ie they should do the opposite of what they've been doing for the last thirty years.

A good rule of thumb is that 1% of unemployment costs 3% of economic growth. By creating this problem, successive governments built the superannuation gap. Should the people whose lives they ruined by casualising their jobs go short to pay for these scum?

 I don't think so.

The first cut should be to parliamentary retirement benefits.

by william blake on June 03, 2010
william blake

Isn't getting super when you pay tax on $250-400,000 just a rebate?

 

by Tim Watkin on June 03, 2010
Tim Watkin

Graeme, you miss the political point. If, God help you, you vote ACT to deal with this and mean-testing is introduced, how long do you think it will be before those no longer getting it start complaining that their taxes are being wasted on people who should be saving for themselves? That same ACT party will soon be growing support for pure user-pays.

But quite apart from that, why shouldn't a pension be something that's simply a right of citizenship, regardless of income? There's little enough that's universal any more. We don't deny Jim Anderton a public hospital, so why should a pension be treated any differently? Pensions were the beginning of our welfare state in the 1890s and are a right.

by Graeme Edgeler on June 04, 2010
Graeme Edgeler

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Doesn't sound like a universal right to me!

Old Ages Pensions Act 1898

8. Necessary qualifications.

No such person shall be entitled to a pension under this Act unless he fulfils the following conditions, that is to say:—

(1.) That he is residing in the colony on the date when he establishes his claim to the pension; and also

(2.) That he has so resided continuously for not less than twenty-five years immediately preceding such date:

Provided that continuous residence in the colony shall not be deemed to have been interrupted by occasional absence therefrom unless the total period of all such absence exceeds two years; nor, in the case of a seaman, by absence therefrom whilst serving on board a vessel registered in and trading to and from the colony if he establishes the fact that during such absence his family or home was in the colony; and also

(3.) That during the period of twelve years immediately preceding such date he has not been imprisoned for four months, or on four occasions, for any offence punishable by imprisonment for twelve months or upwards, and dishonouring him in the public estimation; and also

(4.) That during the period of twenty-five years immediately preceding such date he has not been imprisoned for a term of five years with or without hard labour for any offence dishonouring him in the public estimation; and also

(5.) That the claimant has not at any time for a period of six months or upwards, if a husband, deserted his-wife, or without just cause failed to provide her with adequate means of maintenance, or neglected to maintain such of his children as were under the age of fourteen years; or, if a wife, deserted her husband or such of her children as were under that age:

Provided that, if the pension-certificate is issued, the pensioner's rights thereunder shall not be affected by any disqualification contained in this subsection unless the fact of such disqualification is established at any time to the satisfaction of a Stipendiary Magistrate; and also

(6.) That he is of good moral character, and is, and has for five years immediately preceding such date been, leading a sober and reputable life; and also

(7.) That his yearly income does not amount to fifty-two pounds or upwards, computed as hereinafter provided; and also

(8.) That the net capital value of his accumulated property does not amount to two hundred and seventy pounds or up-wards, computed and assessed as hereinafter provided; and also

(9.) That he has not directly or indirectly deprived himself of property or income in order to qualify for a pension; and also

(10.) That he is the holder of a pension-certificate as hereinafter provided.


9. Amount of pension.

The amount of the pension shall be eighteen pounds per year, diminished by,—

(1.) One pound for every complete pound of income above thirty-four pounds; and also by

(2.) One pound for every complete fifteen pounds of the net capital value of all accumulated property, computed and assessed as next hereinafter provided.

New Zealand has had a universal, untargetted pension for two periods in its history - from 1977-85, and from 1998 to the present. I do not see why this short history should set it in stone.

You ask why should this be treated differently from public hospitals, I might equally ask why should it be treated the same. Why do we deny workers the dole? [Gareth Morgan has recently suggested that we shouldn't.] If we means test the unemployment benefit, how long until workers start complainging that their taxes are be wasted on people who should have purchased unemployment insurance or saved for a rainy day? Won't ACT be pushing for user pays for that too?

But to answer your question: "why shouldn't a pension be something that's simply a right of citizenship, regardless of income?"

Because there are other - more worthwhile - things to spend the money on.

by william blake on June 04, 2010
william blake

I know you will correct me if I am wrong...but I thought superannuation was an investment managed by the Government on our behalf that matured at retirement, compulsory savings. Superannuation is therefore not a benefit.

Tim in saying that the boomers are a plague of locust about to descend on the state aren't you forgetting the ammount of tax and investment this population bulge has contributed?

While the boomers may be living longer than their parents and will seemingly erode the fund, what has happened to all of the capital gain that came from the generations that popped their clogs at three score and ten?

I wonder if sucessive governments have been tinkering with the super fund to get it running at a super lean mix? as Graeme suggests doing more 'worthwhile' things with surplusses? Does anybody know if this is the case? and if so is that not the same as what so many of our collapsed  Investment Companies have been doing?

by Graeme Edgeler on June 04, 2010
Graeme Edgeler

I know you will correct me if I am wrong...but I thought superannuation was an investment managed by the Government on our behalf that matured at retirement, compulsory savings. Superannuation is therefore not a benefit.

You are wrong.

People pay taxes. A portion of those taxes pay the superannuation of current retirees. It is hoped by these taxpayers that there will be enough taxes paid by enough taxpayers in the future to provide for them in their retirement.

Following a realisation that this probably won't be the case, the last Government started squirrelling away money in the Government Superannuation Fund (the "Cullen Fund") so that there would be some money in the bank to help pay for it. This was the beginning of pre-funding of retirement savings (after a brief attempt starting by the Kirk/Rowling Government, and scuppered by Muldoon shortly thereafter - implying that the fund would be communism).

However, even with the GSF, most of the cost of future supperannuation will still be covered from taxes. The pre-funding was only intended to cover a portion of the cost (around 20%, I think).

Sucessive governments haven't been tinkering with it for a couple of reasons:

1.The legislation setting up the fund has the fund's "guardians" at arm's length.

2. it hasn't been around across successive governments

by Claire Browning on June 04, 2010
Claire Browning

We need a government with the courage to grapple urgently with the question of retirement funding. ... Rather than grasp that third rail, the government is looking at the other part of the equation; its Welfare Working Group kicks off next week looking at how it can save money in "all the other things that we're doing", which makes me very nervous indeed.

With you completely on the first point; the second, not so much. Most of us, one way or another, are in line with our hands out. WFF, interest free student loans, Kiwisaver ... you can argue about what's 'welfare', and if the Welfare Working Group is about bashing beneficiaries in the narrow 'safety net' sense (unemployment, non-elective public health, ACC) I might agree. But the wide spread of the other entitlements doesn't make them fair; not all of the packages are smart policy or well designed.

We need a government with the courage to grapple urgently with the whole question of state 'entitlements'. As I understood John Whitehead's point, it's just not fair to load it all on the baby boomers (though I agree super has got way out of whack with what was originally intended). It's a debate about social choices. You know, the kind grown-ups have.

by Tim Watkin on June 04, 2010
Tim Watkin

Graeme, gotta love your work. That's a great extract from 1898. Sober and moral character... men have to provide for their wives... But essentially we're at odds because we disagree on your final point. I want to see my taxes used to provide basic care and services for all, and thanks to hard won political battles hospitals and penions are on that list. You want to start chipping away? Just be aware of where that leads.

And to add to your reply to William, profits (as opposed to surpluses) are to be spent on Super, from memory from 2025 onwards, but I could be wrong.

@ William, yes the boomers have paid taxes, but a lot less than the generations before them. They have given themselves generous and repeated tax cuts, meaning fewer services and assets for the generation coming behind. I used the locust metaphor because the baby-boomers (not all, of course, and in a broad, generational sense) have simply gorged themselves without thinking about what they leave behind.

by Carolyn on June 04, 2010
Carolyn

Clearly the age structure, baby-boomer population bulge and economic considerations do mean that superannuation & pensions are an issue... a big problem even.  But Tim, it does look to me like a weak disclaimer that accompanies your highly personified attack on a whole generation - on my generation.

I do get a bit sick of the way we are all labelled as one big stereotypical bunch - usually to villify us all with one rhetorical blow.. As far as I have seen, people of my generation are a very mixed bunch: some have been responsible for great evils, some for great amounts of good, and most of us for smaller amounts of both.

I, and many people I know of my generation, certainly have never "gorged ourselves", and had no thought for future generations.  Many of us have been out there protesting & arguing against capitalist excess, for decades, and more recently working for lifestyle changes to counter climate change.   I certainly have always lived pretty frugally, and have never been into that whole excessive consumer life-style that developed in the 80s.  That's something that seemed to take a stronger hold amongst many younger people than the ones I spend most of my time with. Though there's also some pretty rich and materialistic people of my generation too.

I, and most of my friends, have always voted and argued for keeping taxes high, and for extensive welfare state provisions.  I guess it is some of the most powerful members of my generation who have used their power, to cut taxes, and extend their own wealth.  But many of us have had no responsibility for that, and generally have been pretty angry and militant about trying to resist it.

I have worked all my adult life (except for some periods of  study, although most of my qualifications were gained by studying parttime while working part or full time).  And I'm hoping to go on working for as long as I can.  I have been planning for that by talking a second, less demanding parttime job, while still working at my main job. I am quite pleased to see that there is now some encouragement to keep working past 65 years.  My main concern is employers dsicriminating against giving work to older people.

I enjoy working, and like many others of my generation, I have tried to keep fit, & live healthily so I can stay independent for as  many years as possible - I have never earned as much as Jim Anderton & never will.  I will be happy if I can support myself for a while yet on a more meagre income.

But, I have also seen my own mother deteriorate with Alzheimers.  I hope the state keeps being able to provide for people as they deteriorate with age.

I think it's a good idea for there to be compulsory contributions to pension funds while we are capable of work.

But, talking about an entire generation as though they are of like mind, or are as well off as the richest & most powerful people of our generation, is just not helpful.  It's something that some journalists seem to do with each generation - try to label them as having a specific outlook on and approach to life.  Actually there are as probably as many differences within a generation as between them.

I think there are more constructive ways to deal with issues raised by having an aging population.  I think a basic universal pension, is the way to go.  Means testing creates more problems than it solves.  Plus people should be actively encouraged to invest in pension funds (and to to save more than is being encouraged). I have been an enthusiastic supporter of Kiwisaver. And I think there could be a change in mindset towards "retirement" or later-life careers/jobs: ones that are not necessarily full time, or as demanding as the work we do when we are younger, but that can be seen as rewarding and enjoyable.

by Graeme Edgeler on June 04, 2010
Graeme Edgeler

I want to see my taxes used to provide basic care and services for all, and thanks to hard won political battles hospitals and penions are on that list.

The initial creation of the pension was a political fight, but the universal untargetted pension we have now wasn't a hard won political battle, it was an election bribe, first from Robert Muldoon, and later from Winston Peters.

And if someone is earning a quarter of a million a year, the pension doesn't provide basic care and services to them, but extra pocket money for their twice-yearly overseas holiday.

Where does chipping away at this lead? For a start, toward the Welfare state the first Labour government instituted; second, to a future where we can afford to pay the pension to those who actually need it.

by william blake on June 05, 2010
william blake

Thanks Grame I knew someone would put me right. Any idea when the Cullen fund might start coping with the boomer curve, or will in never catch up?

 

I see what you mean about thinking along the lines of the far right though, when it comes to super. With the boomers as a demeographic well set up with assets, I can see super as being a nice wee top up; but this does ignore the life long payment into the scheme factored into their taxes.

Ultimately the boomers are the main voting block for the next 15-20 years; I can see elections being won or lost on this issue alone. Isnt this why John Key won't go near the issue?

by Brendon Mills on June 05, 2010
Brendon Mills

If you wish to cancel or scale back state benefits and our social safety net (and not just National Super, as Ms Browning suggests), that's fine.

Just remember to accept that any wholesale destruction of the social welfare system will result in severe hardship and homelessness, espcially amongst our most vulnerable. If you want single mothers go go and live in their cars, the elderley to eat dogfood, and people dying of cancer because they cannot afford treatment, because you are unhappy with the amount of tax they pay, then you really need to have a long hard look at yourself in the mirror.

I really dont want to live in a society there people are left in desitution through no fault of their own.

by Chris Trotter on June 05, 2010
Chris Trotter

What an interesting thread.

I always know I'm dealing with really nasty pieces of work when I see human-beings characterised as insects.

Why don't you just reach for that can of pesticide, Tim? I hear Zyklon-B works wonders on human vermin.

I'm grateful, however, to all the commentators for making so very clear the political battle-lines of the next 20 years:

On one side stand those of us who still see society as encompassing every citizen - black and white, male and female, native-born and immigrant, young and old.

On the other those who see the future as a zero-sum conflict between an older generation of "locusts" and a younger generation of pest-controllers.

The work of people like Michael Littlewood and Susan St-John has clearly demonstrated that NZ's super' scheme is one of the fairest and most sustainable on Earth. The size of the dependent population remains about the same as it ever was in NZ - actual dependency has simply shifted from the very young to the very old. (In case all you pest-controllers hadn't noticed there are far fewer children to take care of, house and educate than there were 65 years ago.)

But, hey, why bother to seriously investigate this issue? So much more fun to swallow the neoliberal line from Treasury and the BRT (not to mention Act) and hurl yourselves into full-scale inter-generational warfare.

And how else are the wealthy going to justify keeping in place the absurdly low level of taxation on their incomes?

Divide et impera - the oldest trick in the book. And you muppets fall for it every time.

by Carolyn on June 05, 2010
Carolyn

In terms of serious investigation, there's this research that examines stats for the current & very recent cohorts of elderly:

http://www.waikato.ac.nz/wfass/populationstudiescentre/docs/ewas/index.shtml

I was particularly interested in aspects of diversity amongst the aged.  In my memory throughout my lifetime, women, Maori, Pacific people's  all have been over-represented amongst people on lower incomes.  This research tends to confirm that this is still the case amongst people over 65 years.  My generation of women (at the latter end of the "baby-boomer" generation), were largely encouraged to be teachers & nurses, and expected to do such jobs until they got married.  The jobs traditionally done by women still generally pay less than more male-dominated jobs. And women still struggle financially when they change from married to single status, whatever their age.

This research confirms the fact that, amongst the aged, men are over-represented amongst the wealthier old people, and women amongst the less well off.  This is especially true for women living alone.

The research also shows that more women continue to work after retirement age than men, perhaps because they are aware that pensions & their savings/assets will not be enough to keep them comfortably into their old age.  And women on average continue to live longer than men, meaning that for many women their savings need to support them for longer. This will further be impacted by the fact that women of all age groups have continued to take breaks from employment in order to bring up children.

So, I guess the baby-boomers with most assets and savings are likely to be middle-class white men - is this who people are mostly thinking off when they talk about baby-boomers as a homogeneous mass with a lot of assets?

And, as well as the fact there are less young people to support (as Chris points out above), some of the younger tax payers will benefit from inheriting the assets & wealth of the wealthier boomers. So, given that some of them stand to gain quite a bit of wealth through no effort of their own, surely they can continue to pay taxes to help benefit some of the less fortunate of all generations.

 

 

by william blake on June 05, 2010
william blake

Zyklon B??? Jeez Chris don't hold back mate; oh are you a boomer?

After a bit of poking about it seems that the political pressure may be off Jkey, as the latest research shows that the average lifestyle of a boomer will spike in the biggest dementia epidemic ever seen; so if Caulfield Holden manages to find the polling booth he won't have a clue who to vote for.

by Tim Watkin on June 06, 2010
Tim Watkin

@ Carolyn, thanks for that research. That feeds into one of the questions I was asking, about how fair it is to raise the retirement age when that would discriminate against those less well off, and as you point out, women as well.

I understand your earlier points... but from the subhead on I was careful to talk about the generation, not individuals. Not every person defines a generation and I make no criticism of you or other individuals, but to see the big sweep of history we sometimes talk in sweeping language – not everyone in the World War II generation deserves to be called "the Greatest", but that hasn't stopped the word from being applied. Not everyone suffered from the Depression during the 'Depression Era' either.

The reality is that the provision of state services has been much kinder to the baby boom generation than any other, following hard won gains through depression and war.

And they were hard won, Graeme. You're only refering to the end of much longer political battles.

@ Chris... so eager to take offence and again so unnecessarily personal in your criticism (which is more divisive than asking questions, I've always thought). It's a political metaphor for goodness sake. Have you never used one? And somehow you get a neo-liberal line from that post? Come on. It's the neo-liberal changes that have denied my generation, and my son's, the same support you were given. You've argued against them, but because it was your generation that made them, you're now compelled to defend them?

That's not what you intend, I know, but you're in danger of veering in that direction. Don't you see what you say in your own comment? The baby boomers dominated state provision when they were young and you're dominating it as you grow old, and all the while you take the finite resources because you dominate the vote to the extent that even a PM with huge popular support won't dare to ask a few hard questions.

My argument in this post and others has simply been that the baby boomers are going to demand a lot from the state in the next 40 years and should be contributing, saving collectively and asking if – if – sacrifices are needed, rather than helping themselves to more tax cuts, while cutting Super Fund contributions, early childhood education and the like.

 

by Bruce Thorpe on June 06, 2010
Bruce Thorpe

If the current system is unsustainable as you claim, it would be grossly cruel and unfair to raise the age requirement.

A lot of the discussion about mean testing seems to focus on a mythical right for all citizens to have their income topped up regardless of circumstances.

I have always considered the pension to be a minimal guaranteed income to those of diminishing earning power. In times of increased joblessness, the truly poor in our society , if they reach the age of 65 have typically had an inadequate income for a number of preceding years and are desperate for the respite of something more than the dole for what will probably be a few brief years.

At the other end of the personal wealth spectrum,  many can look forward to another couple of decades of prosperity regardless of public subsidy.

Fifty years ago our benefit system had a two tier system with a higher rate of income tested benefit available at 60, and a universal, much lesser amount at 65. It still seems fair to me.

 

 

 

by Simon James Parish on June 06, 2010
Simon James Parish

I'm a part of the swarm about to find the crop to settle on, and as I have winged my way here I have often wondered why we look at the issue of the funding of superannuation in isolation.

The administration of Douglas (who incidentally simply mirrored Geoffrey Howe of Thatcher's realm), removed exchange controls and allowed the corporates and a lot of greedy boomers to move capital overseas at will.  How much has that cost the Revenue department in real terms - New Zealand Inc.

It goes for the whole Welfare System and Taxation.  Give a big tax cut to those who need it least and they will salt it away overseas (even if it is only by upgrading to business class when they travel).  On the other hand, give the biggest increase to those on the lower end and they will spend it on everyday necessities and it stays sloshing around in the New Zealand economy and eventually back to the government through taxation

It might just mean reviewing exchange controls though...

 

by Chris Trotter on June 06, 2010
Chris Trotter

My goodness, Tim: collective guilt and collective punishment!

I had no idea your education in the techniques of totalitarianism had come so far.

What's next? Special camps for people over sixty-five - oopps, I'm sorry, sixty-seven.

by Carolyn on June 06, 2010
Carolyn

Tim, thanks for your reply, but you continue to give with one hand and take away with the other. I don't know whether to laugh or cry at some of your comments.  Large numbers of baby-boomers have been frustrated and angered by, and have agitated strongly against the shift to neoliberalism.

You acknowledge some groups of baby-boomers are not so well off, especially large numbers of women, then they slip off the radar when you prescribe your fix. The baby-boomers most likely to be in need of benefits when they hit retirement age, are most likely to be the ones I know, who have been scrimping, saving, and often going without their whole lives.

You lecture baby-boomers on making sacrifices? This is the generation that was born into & grew up in quite austere times.  To many middleclass youngsters, born into the consumer excess, my childhood must sound like a Monty Python sketch:  no washing machine, no fridge, no TV, no transistor radios, rationed hot water, etc, etc.  I can remember laughing in disblief with my friends when we first heard the neoliberal ethos of consuming our way to prosperity.  We had always been taught that it is saving, and frugality that leads to prosperity?

And yes, the baby-boomer generation have benefitted from the improvements in social welfare since World War 2, but so too have many people in younger generations. Baby-boomers have also been the generation, because of our large numbers, who have paid a significant proportion of the taxes that paid for those benefits.  I am happy that our taxes contributed to the retirement income of many older people.  But now, as we approach that age, we're told there isn't a big enough younger generation to pay for our retirement.

But for myself, I don't see the problem as being confined just to pensions. This resource-draining, economic philosophy of consumer excess is self-destructive. I'm for a Green New Deal, and a fairer distribution of resources and incomes, which will partly help to ease the pension crisis.  And for that to happen, many younger middle-class/upper-class people too, may need to learn to live with less of the toys & indulgences they have grown up taking for granted.

by Damian on June 07, 2010
Damian

I know that many baby boomers have worked hard but don't confuse the consumerism of today with wealth. Young families may have washing machines but they struggle every month to pay mortgages that are often 50% of income or more. It now usually requires two salaries for young families to survive. 

I think maybe a lot of the unhappiness here comes from the fact that many younger people have had to pay for things like education, suffer means testing at every turn and watch state services, like health, get progressively worse, while taxes and costs seem to endlessly increase. Now with the gold card and universal super it seems that the baby boomers (rightly or wrongly- I think it seems this way as all the current politicians are baby boomers) are not taking their own medicine.

Don't forget that you pay taxes to gain a society, and the large number of baby boomers paid tax to support their larger societal requirements. The following generations are paying taxes as well, but we are being asked to kiwisave for our retirement as well as pay for your retirement and we are under no illusion that by the time we reach 65-70-75 (whatever the age is by then) there will be no gold card and there will definitely be a means tested super, if one exists at all.

I believe it may be more a bit of a feeling of hoplessness and helplesness than anger at the boomers.

by Tim Watkin on June 07, 2010
Tim Watkin

Carolyn, I don't prescribe a fix. It was Whitehead who talked about raising the age, and given his authority, this country's pending demographic chages and the politics of the times, I take it seriously. My point is that we need to start wrestling with this more seriously, because financial and political pressures are coming and something is going to get cut as a result.

Your stories of hardship again mistake the general for the personal. Economic history will tell you that western baby boomers have been the most prosperous generation in world history – never before has there been so much employment, shared wealth, social welfare and steady growth. You talk about later generations also benefitting from post-WWII welfare improvements... and that's part of my point; in my lifetime social welfare and services have shrunk markedly, not improved. Later generations simply aren't getting what you enjoyed.

Let's be clear – I'm all for pensions, as I wrote to Graeme. What worries me is that more shrinking is coming, and yet the baby boomers again will be protected by their voting power, while the rest of us are asked to wear the cuts.

Damian picks up on what I'm saying and says it very well...

by Graeme Edgeler on June 08, 2010
Graeme Edgeler

many younger people ... watch state services, like health, get progressively worse

How is the healthcare provided by our current health system worse than what was provided 10, 20, or 30 years ago?

by stuart munro on June 08, 2010
stuart munro

@Graeme -high entry costs deny service to the poor.

Visited an NZ doctor 2 years ago,for a minor ailment. $50 for the appointment & 45 for the prescribed treatment.

Visited a local one in Korea a couple of weeks ago - $3.60 for the doctor & $3.00 for the medicine.

In NZ, if you're poor you are royally screwed. Elsewhere it's not so bad.

 

by Carolyn on June 08, 2010
Carolyn

Tim, I am totally aware that life is getting tougher, and that any many ways they are a lot tougher for large numbers of younger people (though some are far wealthier already than many of my generation, in spite of the increasing costs and limited welfare provisions). And many of us boomers are extremely frustrated and angry that this has happened.  We have advoctated & agitated against such a society all our adult lives

But, what I take issue with is your blanket blaming and skewed representation of the whole generation.  This includes an assumption that we are all better off than many younger people, that we have "gorged" ourselves with no thought for future generations, and that we have no idea of what it's like to live on little or make sacrifices.  And in doing this, the diversity amongst  boomers is lost, the real culprits are masked, potential allies are set against each other, and it becomes harder to identify any workable solution.

As well as all the other kinds of diversity within the "boomers", it is generally defined as spanning 1945-1964/5.  The later contingent (people of John Key's age) were born into conditions had changed vastly by the 60s.  A large number of us who grew up in the 50s lived pretty frugally, and were schooled in a collaborative approach to social welfare, living on little and saving.  Neoliberal values are in total conflict with this.

Tim, I'm particularly irked that you have presented a pretty skewed picture of the boomers and the impact they/we have had.  Large numbers of the earlier contingent of boomers were at the forefront of struggles for class equality, social justice, civil rights campaigns, and all the identity issues such as those of gender, 'race' and sexuality.  And, from where I sat in the midst of those  struggles, by the late 70s it looked like we were winning, working towards a much brighter, socially just future.

Then can the noeliberal nightmare. You blame boomers for this shift.  But it wasn't boomers who led this unjust change to higher extremes of inequality and the cutting back of the welfare state.  The main political personel who headed it were from an earlier generation; Thatcher, Reagan and Roger Douglas  were all pre WWII babies.

The "hippy", social class, civil rights & identity revolutions were all movements from "below", driven by networks of grass-roots activism, and the "will" of large numbers of ordinary people (largely ordinary boomers).  The neoliberal revoltion came from "above"  - from politicians, and the older wealthy elite that re-asserted itself because they saw their power & influence diminishing.  They re-asserted themselves with some strong use of manipulations: of the FPP policial system (they often weren't voted in by majority of voters, boomers or otherwise), of the media (Thatcher for instance, gradually worked to get sympathetic editors into the MSM, who would cheerlead & distort her political changes).  And in NZ, MMP, boomer Helen Clark & Labour got voted in by an electorate (including large numbers of boomers) who were unhappy with the neoliberal changes.  But the elite from within & without NZ continued to pile on the pressure to keep to the free-market, individualistic agenda.

So I, like many other boomers will be right with any who continue to advocate for an end to this neoliberal madness.  I understand why many young people are angry at the rolling back of the welfare state - so are many of other boomers.  But directing your anger indiscriminately at the "boomer "masses is really mis-directed, and it masks the real architects of such a society, who contrinue to be peopled from amongst elites & their supporters across all generations.

 

by Andin on June 08, 2010
Andin

then raising the age to 67, as in Australia,

Hmm on the ATO website it still says retirement age in Australia is 65 not 67.

And you are eligible for super from that age.

Are you in possession of information the ATO isnt? A small point I know but accuracy is important.

by Chris Trotter on June 08, 2010
Chris Trotter

Well said, Carolyn!

Now, Tim, having been well and truly Fisked, why don't you take yourself, and that thoroughly offensive little kite you've been attempting to fly, along to the nearest Act Party branch meeting - where I'm sure you, and it, will receive a very warm welcome.

by Tim Watkin on June 08, 2010
Tim Watkin

Andin, Labor announced it was raising the age in last year's Budget - it's on its way up to 67 over a decade or so.

Chris, I really don't understand you - are you purposefully ignoring most of what I'm writing? Have you reached the point where you're unable to tell the difference between debating ideas and just tossing out personal abuse?

Carolyn, we're talking past each other a bit. I don't disagree with most of what you're saying. The baby bommers can claim all those badges of honour that you list, but my post wasn't about civil rights or anything else you mention. And of course there are a vast range of opinions within any generation.

But by your rules we can't talk about the arc of history, because we'll always be generalising. Can we talk about the oppression of women or gays? Can we say that Maori have long been at the bottom of the heap in this country? Can we talk about an entire class? (Chris?) You can find huge exceptions in every instance. If I can't write about a generation, then no-one can write about any mass group.

Hobbes said life is "nasty, brutish and short," yet some in his generation would have had a glittering life. The 'Me' generation hitting adulthood in recent years is full of self-sacrificing souls, but polls and experience talk of certain generational attributes.

You get what I'm trying to say? You have a point about Douglas et al, but it was baby boomers who dominated the voting when those folk were elected; it was boomers (as a whole) who voted for their reforms. The fourth Labour government is regarded as the first boomer government. You and I don't like some of its reforms, and "the real culprits" are many, but in a democracy they include the masses who voted the way they did.

(However this isn't a zero-sum game. Just because I put some blame on the boomers en masse doesn't men I can't also blame individuals such as Douglas, and if you read any of my other posts you'll see that I do. Chris knows better, so is just being offensive. You may not have read other things I've written, but if you trawl through the site you'll see plenty of other posts where I'm sure you and I are on the same page).

So let me put it this way... is the welfare state better or no worse than it was then when the boomers came to power? I say it is worse. That happened on the baby boomer's watch.

 

by Andin on June 08, 2010
Andin

raise the pension age to 67 by 2023.

So thats 13 years by my calculation.

And didn't  a Mr Muldoon fiddle with a Labour super scheme somewhere and screw it up. And I dont think he can claim to be a boomer.

" is the welfare state better or no worse than it was then when the boomers came to power? I say it is worse. That happened on the baby boomer's watch."

I must look up a demographics from 1975, and voting patterns.

Back later.

by stuart munro on June 08, 2010
stuart munro

Actually Tim, Chris is right. And Chris is never right.

Where do you get off putting super up for grabs? And taking Treasury advice from a little to the right of Attila the Hun doesn't let you off the hook.

Countries can afford what they choose to afford. Treasury believes we can afford tax cuts but not a credible social welfare system.

If Treasury gave a rat's about NZ their top priority would be property tax reform. It might earn enough to pay the super gap too.

by Tim Watkin on June 08, 2010
Tim Watkin

Stuart, I said we needed to look hard at an agonsingly difficult question and debate it, in part because the government is looking to cut welfare and the only thing ruled out is super. I didn't put it up for grabs. In fact, I'm arguing that it's a right of citizenship and have already made the point about tax cuts...

by Claire Browning on June 08, 2010
Claire Browning

Things have moved on, in a very satisfactory way. But just to set the record straight, @Mr Mills, I was not advocating, or defending, wholesale destruction of the social welfare system, dismantling the safety net, or any other allegation of the kind.

I was asking middle class, perhaps quite wealthy people, who duck for cover behind that sort of rhetoric to man up. If it comes down to a forced choice between them taking the state dollar themselves, or giving it to someone else more needy, will they have the courage of their convictions and do it? Because, like Tim, I take John Whitehead at his word when he says we can't afford, going forward, to do everything.

What I would do (perhaps unlike Tim, not sure) is debate everything, not just welfare, not just super. Again, that is taking the chief economic advisor at his word.

There ought, in theory, to be enough boomers with children and grandchildren, and non-boomers with boomer parents, so that everyone has an interest in getting the mix of state entitlements right, across the board, without firing off cheap shots about 'inter-generational warfare'. But since some of us can't even seem to discuss it here on Pundit in a civil fashion, maybe that's naive ...

by Andin on June 08, 2010
Andin

"perhaps quite wealthy people, who duck for cover behind that sort of rhetoric to man up."

Funnily enough those wealthy boomers are somewhat lacking in an ability to assess their circumstances. And while they think they are not exactly poor, they don't exactly consider themselves wealthy.(How do you think they got wealthy) Weird eh! How do you deal with that. I dont think "Man Up" is the solution.

The baby boom is a bell curve beginning circa 1946 peaking 1955-6 and down the other side to 1966. So the problem will not go on eternally.

So lets look at how to get through that difficult period probably starting when the peak of the bell curve boom hit retirement, till death rates even things out. Oh I'm cruel...

by Chris Trotter on June 08, 2010
Chris Trotter

Yes, Tim, I am being offensive - quite deliberately so - but that's only because of the extreme offensiveness of the ideas you are defending.

I've become resigned to Claire's political ignorance but, honestly, I expected better of you.

by Linda Clark on June 08, 2010
Linda Clark

Fascinating thread and yes a debate that the politicians will have to face sooner or later, not least because those inside the Beehive have never much believed the research Chris refers to.  

That said, the problem with excluding "quite wealthy people" as Claire suggests, is that the pension itself then becomes marginalised.  David Lange was always very aware of this; when the middle classes are excluded from a benefit they have less of a stake in funding it.  Imagine where that would take us.

And the trouble with "looking hard at an agonisingly difficult question" is that those most affected by any decision won't be consulted along the way. 

 

by william blake on June 09, 2010
william blake

Any suggestion of a tax abatement, after 65, for those still able and willing to be in the workforce; instead of a pension? 15-20 years of 'unemployment' for the willing could be a daunting prospect.

by Claire Browning on June 09, 2010
Claire Browning

That's okay, Chris. I'd rather be ignorant, than narrow-minded and rude.

I'd rather not join in the rousing chorus of 'Solidarity Forever', and the sermons on libertarian ideals, if the noise ends up drowning out all views but your own.

I was interested to read your Bowalley Road Rules. “These are based on two very simple principles: Courtesy and Respect. Comments which are defammatory, vituperative, snide or hurtful will be removed, and the commentators responsible permanently banned.

'Defamatory' has only one 'm', by the way.

by Tim Watkin on June 09, 2010
Tim Watkin

Chris, that's up to you, but playing the man and not the ball only diminishes your integrity and burns bridges. Claire's recital of your own rules raises the question, why not play by the same rules away as you do at home, eh?

I'd still be interested to see whether you've got the gumption to tackle the core question that I asked Carolyn, which is: is the welfare state better or worse under your generation? Do you accept the central proposition that despite the efforts of Carolyn and even you, baby boomers have repeatedly and distinctly voted in their own interests, at the expense of future generations, and that those following you have suffered as a result?

And hi Linda, lovely to have you join in. Welcome. You make the political point that I tried to make in the original post and which Graeme challenged - that super's universal nature has helped keep it safe.

 

 

by Chris Trotter on June 10, 2010
Chris Trotter

Gee-whiz Tim & Claire, I had no idea you Pundits were so thin-skinned.

If you check out the commentary threads at Bowalley Road you'll find criticism a great deal more robust that anything dished-out here.

The Bowalley Road Rules were designed to deter obscenity and defamation (thanks for the spell-check BTW, Claire, spelling never was my strongest suit) the sort of thing you read on Kiwiblog threads - not the cut-and-thrust of genuine debate.

As to your challenge, Tim, it's not worth the effort.

In framing the question you betray a clear belief that the policies of any given era can, somehow, be sheeted home to a particular generation. You seem to think that at some, unspecified, moment in time every voter not born between 1946 and 1966 agreed to refrain from entering the polling booths, thereby leaving the "decisions" to the Baby Boomers alone.

It's just nonsense - like saying that "Maori" voted for this, or "women" voted for that.

There is as much variation within a group defined by its ethnicity, or its gender, as there is in a group defined by birth cohorts.

Baby Boomers didn't define the last 25 years, Tim, that was the work of New Zealanders - of all ages.

by Tim Watkin on June 15, 2010
Tim Watkin

That's a cop out Chris... keeping on arguing the tangent rather than tackling the substance.

But even your tangental argument isn't sustainable because you're trying to take it to ridiculous extremes to justify it. Of course there are a range of opinions within any group – as I've repeatedly written in response to Carolyn.

But it's hardly a complex or radical idea to assert that large groups dominate in a democracy and to analyse those groups en masse. Are you telling me that I can't say that whites have dominated US politics? Must we ignore feminist criticism about the dominance of men or Marxists talking about the domination of capital?

Given your argument, you won't ever write about 'Maori' again, because every Maori individual has a different view. Or 'New Zealanders'. And you'll never mention 'the right' because there's huge variance in there. Indeed, it'll be interesting seeing a collectiivist like you write only about individuals from now on, because you can't possibly generalise about more than one person...

As for your personal comments, I don't consider being willfully offensive or calling Claire "ignorant" to be courteous. The rules here are to debate the ideas, not insult the people. Simple.

 

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danniel

I've never been good about politicis and now I understand why. I don't think every little thing that happens with our governors affects us. I am affected though about the Currency Conversion rates in different states. We should find some better formulas for these ones.

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