Speech: Auckland Grey Power
David Shearer | Tuesday, August 7, 2012 - 18:24
Thank you Anne-Marie Coury for your welcome.
I understand Anne-Marie’s father-in-law was the press secretary to Walter Nash, the former Labour prime minister.
I am going to talk to you about something Nash stood for that I think is just as applicable today: He wanted to make sure everyone got a fair go, whether they were a retired New Zealander, or a young family just starting out.
The basic social contract back then was that everyone would pull their weight, do the right thing, and they expected the government to keep its side of the bargain.
Last year before the election, I was chatting to a guy in my electorate who had just got home from work. In the middle of the conversation, he stopped and pointed across the road to his neighbour.
He said: “see that guy over there, he’s on a sickness benefit, yet he’s up there painting the roof of his house. That’s not bloody fair. Do you guys support him?”
From what he told me, he was right, it wasn’t bloody fair, and I said so. I have little tolerance for people who don’t pull their weight.
We don’t like others ripping the system off – and those who get most incensed about it are people like this bloke who works hard, does what he believes is the right thing and earns close to the minimum wage.
His comment cuts to the heart of something very important to New Zealanders: fairness.
Fairness is a core feature of New Zealand. It is heavily ingrained in our DNA. I believe it stems from our history, a country built on equality, free from the old class addled system of Great Britain.
We have a social contract in New Zealand. It works like this: if you need help because of something unexpected: an accident, a loss, or if misfortune befalls you, you will be supported.
But once you’re back on your own feet, we expect you to pull your weight once again and contribute back to society.
The Government’s role is to ensure that this transition happens – through up-skilling, education and a nudge behind those not meeting their side of the contract.
One of the first instances of this social contract was put into practice by three people, Arnold Nordmeyer, Gervan McMillan and Andrew McRae Davidson. They were the local church minister, GP and school principal who had the foresight to establish a small healthcare fund for workers on the Wairaki Dam.
It was tough, depression-era labour: building a dam by hand with picks and shovels, yet the workers would pay into the fund each week out of their meagre incomes, and in return they would get free health care and medicine.
McMillan and Nordmeyer went on to become MPs in the Labour Government, and their Wairaki healthcare scheme later developed into our universal health care.
It was the beginnings for of that social contract: That people could end up in hardship through no fault of their own, and in those cases we have a responsibility to provide a decent standard of living.
But it’s never been about all take and no give.
The other side of the contract is that everyone has a responsibility to contribute to their community. You didn’t get social security if you could work. If you couldn’t work, your community looked after you.
The same principles apply to superannuation. While you are working you contribute to superannuation, so that when you retire there is something set aside to live on.
That is fair.
In fact, our scheme is one of the fairest in the world because it set aside the same amount for everyone, whether you were at home raising the kids, working to build the dam, or the boss.
It’s a scheme to be proud of, and its crowning success is that in New Zealand we have one of the lowest rates of poverty among seniors of anywhere in the world.
I want to make sure that endures into the future. All New Zealanders should be able to look forward to receiving super – including our children and grandchildren.
When I speak to young people, I notice they have lost hope that super will be there when they reach retirement age.
They have lost their faith in politicians who have used this issue as a political football and are only interested in the politics of the here and now, not about building for the future.
They can see that we’re living longer, that we have more people in retirement than ever before, and that the numbers are growing rapidly.
I believe it’s our responsibility to find a way to pay for that so our young people don’t miss out when it’s their turn.
Today, for every retired New Zealander there are about 5.6 people working and paying taxes. By 2040, there will be about 2.5 people working for every one retired.
By the time of the next election – 2014 – the cost of superannuation will exceed everything we spend in education – pre-school, primary, secondary and all the polytechnics and universities. And it will continue to rise.
So how do we preserve NZ Superannuation for future generations?
Dr Cullen helped -- he ran a strong economy that achieved good surpluses, and put some of those surpluses into the NZ Superannuation Fund to help with some future costs. But it doesn’t pay the increase in costs, and after the global crisis the government stopped contributing altogether.
The Labour government added to it with KiwiSaver so people in the workforce could set aside something extra for their retirement, and the economy would benefit from deeper pools of savings.
That has been very successful – 1.7 million people are enrolled in KiwiSaver.
Australia has employers contributing 9% into their super scheme – it’s massive now and they have capital in the trillions of dollars.
It was the same scheme introduced by the Labour Government that Muldoon cut in 1975. Just think where we could be now if we’d continued with it.
But the superannuation bill hasn’t stopped growing.
So we in Labour have looked at the options. And the overriding principle in our plan is fairness. Much of what we propose is based on the analysis of the independent Retirement Commissioner. That we raise the age of entitlement from 65 to 67 – just like Australia, the UK and the US have done.
John Key says we can avoid the problem by growing our economy faster. Problem is, we’ve barely managed 1% economic growth since he became Prime Minister.
It’s simply not being honest to guarantee we can pay for our super beyond the life of his government. No economist agrees with him.
Instead, we need to take some tough decisions. I’m prepared to do that. But only on the basis what we do is fair.
First, young New Zealanders should be able to look forward to superannuation when they retire.
We can’t expect them to keep paying a growing superannuation bill just because we refuse to take the tough decisions.
A young person starting out today goes into debt to pay for their education. Then they face house prices totally out of reach for an earner on the average wage.
Meanwhile do we want more and more of the tax they pay to go to an expanding super bill when there’s still health and education to pay for? That’s not on. It’s not fair.
Second, it’s fair to give New Zealanders plenty of time to prepare for any changes. They must be phased in gradually so people have plenty of warning.
No one near retirement age is going to lose their current entitlement, because that wouldn’t be fair.
Third, we need to be fair to people in manual jobs or who, for whatever reason, cannot continue to work.
If you’re a bricklayer or you’ve been on the freezing works chain for 40 years and your back has given out, there will be transitional assistance for you.
Fourth, we won’t cut the rate of superannuation - that’s not fair to anyone. Let me reiterate that - it’s not fair to make changes for super for people who are already retired, and I won’t.
I want us to look ahead at the kind of country New Zealand is going to be in 10 or 20 years from now, and ask how we prepare for that future. Our plan protects everyone who is retired now, while also guaranteeing younger Kiwis they too will be provided for in their old age.
Finally, I want to restate my pledge that I will work across the parliament with whatever party to achieve a consensus on how we move forward.
We are prepared to take the tough decisions. But there are other ideas that we are also prepared to look at. It’s time politicians worked in the best interests of New Zealand.
Superannuation is about planning for the future. And planning for New Zealand’s future is what responsible leaders should be doing.
Your taxes and my taxes have paid for some very productive assets: power stations and power companies, assets like the Waitaki dam that I mentioned -- built by our ancestors with picks and shovels. They should be passed on to future generations.
This government wants to sell those assets off for short-term gain. But once they’re gone, we won’t be able to buy them back. They’ll be gone forever. Our children won’t have them.
There’s no fairness in taking something that’s owned by everyone, and putting it in the hands of the small number of New Zealanders who can afford to buy shares.
Most New Zealanders are too busy trying to pay their power bills to think about buying shares in power stations.
And power prices doubled when they sold Contact Energy off in the 90s. I don’t want to see that happen again.
A striking feature of speaking to Grey Power audiences is that most questions relate to jobs and education – because they are questions about your children and grandchildren.
You know people are leaving New Zealand in record numbers. 53,000 went to Australia last year – it’s never been higher. Email and Skype are great, but nothing beats a hug. And you don’t get many hugs when you live here and your kids are on the other side of the Tasman.
When the National Government came into office promising to be aspirational for New Zealand, they said they could stem the flow of the migrants to Australia and help the underclass.
But all they’ve delivered are books deep in deficit and an economy that has hardly grown in four years.
The old idea that we can compete by paying lower wages - that doesn’t work. Asset sales, selling off our productive farmland, they’re not working either.
So what will grow the jobs, grow our incomes, and keep your grand kids here?
My top priority is education, and making sure our kids leave school with great job skills.
I think a lot of people in this room remember the days when you could leave school and get a decent trades job: an apprenticeship that set you up with skills for the workplace.
The deal was - the employer took on a pretty raw recruit, and by the end they got a highly skilled staffer. Somewhere along the line we’ve lost that.
Meanwhile we’re so short of tradespeople in Christchurch the government wants to begin importing workers from the Philippines.
We have 87,000 kids are not in work or in training. What are they doing each day?
If you keep churning out kids like that – it’s not only a waste of talent, it’s a ticking time bomb. Crime. Social failure and family catastrophe. Higher health costs.
These effects hit everyone - even those who have good jobs end up having to pay the taxes to clean up the mess.
Wouldn’t it be great if they’d been offered trades training instead of given a choice of preparing for a degree or dropping out and disappearing?
We propose giving the dole money to an employer to take on an apprentice. The employer gets a subsidy for the apprentice – and the young person gets the training.
And it costs no more than now.
I’m happy if the current government steals the idea, at least it will help our young people.
If we can get far more of our kids succeeding at school and graduating into great jobs where they can flourish, then more of our young New Zealanders are going to stay in this country and see a future for their families here.
I don’t want them heading off to Australia because that’s the only place where they think they can find work.
So that’s where we need to start - creating a new economy starts with modernising our skills, so young New Zealanders are able to enter fascinating, high-paying, higher-skilled jobs.
But it comes back to where we started. Fairness. That original Kiwi social contract.
Knowing we can all rely on super being there when we need it.
Then we can get on with what kiwis do best: innovating, exporting and getting our economy pumping again.