Govt pushes bipartisan potential of super.

Press, 29 July 1989, Page 3

Govt pushes bipartisan potential of super.

By

PETER LUKE

in Wellington

The Government continued to push the bipartisan potential of its guaranteed retirement income scheme yesterday, but the Opposition homed in on the continued surcharge, and the failure to allow savings concessions. The Minister of Finance, Mr Caygill, said that the G.R.I. meant that the Government had “unilaterally adopted a bipartisan solution.” He argued that resolving this issue once and for all was “essential for the peace of mind of all New Zealanders.” Likewise, the associate Minister of Finance, Mr Neilson, described the G.R.I. as a sincere attempt to achieve political consensus round a financially responsible retirement savings policy. Both Ministers were referring to the fact that the core of the G.R.I. was very similar to National’s own policy, in that it was tax-funded and universal,

and included a long-term rise in eligibility from 60 to 65 years. The Minister of Social Welfare, Dr Cullen, yesterday accused the Opposition of hypocrisy for opposing the G.R.l.’s taxbased approach. “They have shown they never wanted a bipartisan approach. The major parties’ policies are very similar — yet National is pretending they are hot for the sake of frightening the elderly,” Dr Cullen said. The Leader of the Opposition, Mr Bolger, attacked four aspects of the scheme in a post-Budget speech in Auckland. The surtax, which has been amended in the G.R.I. scheme, should have been totally abolished, as the amended version favoured those whose income was from derived pension funds rather than other forms of investment. Mr Bolger also said that the Budget should have contained encouragement

to people to enter longterm contractual savings to provide retirement income. He also attacked the gradual lag in the value of the G.R.I, relative to wages from the present 76 per cent (for couples) to as low as 65 per cent. "That is just not adequate as a retirement income,” he said.

Mr Bolger said that indentifying a retirement tax as a separate component of existing tax demand was an attempt to lend some spurious impression of security to the G.R.I. The G.R.I. was one of two final options considered by the Government, according to Budget-night briefing papers. The other was a two-tiered system of a universal part-pen-sion at half the present rate. This would have been augmented by a compulsory contributory scheme and a means-tested top-up for non-earners. Dr Cullen was known to have initially favoured a scheme based around compulsory contributions, but this option was rejected because of equity issues — including the position of non-earners and those with broken work lives — and because it would have forced individuals to save at times when their income was needed for other purposes.