BY JAMES ROBB AND PATRICK BROWN
AUCKLAND, New Zealand - Sharp debates have broken out in governing circles here over how best to make new inroads against the state retirement pension plan. A proposal to replace universal government-funded pensions with compulsory individual savings goes to a referendum in September. The proposition has met widespread opposition among working people and appears to be headed for defeat. The ruling coalition of the conservative National Party and the rightist New Zealand First (NZF) is itself divided on the question.

Presently, all people over the age of 65 are entitled to a state pension known as New Zealand Superannuation, worth about a third of the average wage for a married person or 43 percent for a single person. This is the main source of retirement income for the majority of working people. Claiming that this scheme is "unsustainable," the rulers have made cutting pensions or dismantling the system altogether a priority in their ongoing campaign to cut the social wage. Superannuation accounts for 20 percent of the government's total expenditure.

Inroads against the scheme have already been made. In 1991 the level of payment was cut and the age of eligibility was raised from 60 to 65. Universal entitlement to the pension was also undermined by a "surcharge," a special tax levied only on retirees, which was introduced in 1984 by the Labour Party government. The surcharge effectively cuts the pension payment to those with other sources of retirement income.

In 1993, the capitalist parties then represented in parliament - National, Labour, and the Alliance - set up the "Superannuation Accord." The goal of this pact was to find further ways of cutting pensions by consensus between these parties, thus keeping the issue out of election debates. But New Zealand First, which was formed that year, criticized the Accord and refused to sign it.

In the 1996 elections, New Zealand First campaigned against the widely-hated superannuation surcharge, promising to abolish it. NZF leaders also put forward a plan for compulsory retirement savings, to be implemented following a referendum. Both of these proposals became government policy when the National Party and NZF formed the current coalition government after the elections. The Superannuation Accord fell apart at that point.

NZF promoted its Retirement Savings Plan as a way to provide income additional to the state pension. But the Compulsory Retirement Savings scheme, as officially announced on July 7 by Deputy Prime Minister and NZF leader Winston Peters, proposes to replace, not supplement, the current state-funded pensions. The "savings" will come from new lifelong taxes on the income of working people and others.

If the scheme wins a majority in the referendum and is implemented, people would be compelled to pay 8 percent of their earnings to an investment fund of their choice run by private businesses. This expense would supposedly be offset partially by reductions on the income tax.

Contributions would continue until NZ $120,000 (NZ$1 = US$0.64) in today's dollars was saved by each individual. Those who could not save that amount would be eligible for a government top-up (supplement) at age 65. The fund would be used to purchase an annuity on retirement. The annual sum would be set at 33 percent of the average ordinary time net wage.

Reporting that most working people are in effect likely to face tax increases under the scheme, the New Zealand Herald said that "about 90 percent of New Zealanders will be worse off."

Opposition to the scheme began building well before the final version was announced, as Peters floated different options. It mounted in the first place among Peters's National Party opponents and rivals within the cabinet. Only a minority of National Party Members of Parliament have declared support for the proposal.

Simon Upton, a senior National Party cabinet minister, said "to tell lower-income New Zealanders that they must pay for a none-too-flash retirement income of $8,352 a year without a shred of assistance is a pretty tough message."

Jenney Shipley, another government minister, said the scheme would be disadvantageous to women and "increase the gap between rich and poor." Shipley's opposition to the scheme was widely reported in the press as an opening bid for leadership of the National Party.

Capitalist politicians and other spokespeople for the employing class opposed to Peters's plan have advocated alternatives centered on further reducing the level of current pension payments, raising the age of eligibility, and introducing means testing. Shipley, for example, proposed retirement age be raised to 67, and that a universal pension be introduced with "a tightly income tested top-up for those who have no other source of income."

"Better to give back taxpayers some of their own money through tax cuts," said an editorial in the July 11 National Business Review, "tell them to provide for their own retirement and explicitly warn that the safety net currently provided by national superannuation will be progressively reduced."

A body that originally reported to the government in 1992 on different superannuation options, headed by Jeffrey Todd, also opposed the compulsory nature of Peters's proposal in a July 31 report. It advocated a mix of voluntary private savings and a government pension, and suggested increasing the retirement age or lowering the pension level.

Polls in July indicated strong opposition to Peters's scheme. Trade union leaders are also urging working people to vote against it.

Most of the different opponents and supporters of the Compulsory Retirement Savings scheme, however, share a common bourgeois framework. They argue that with the proportion of the retirement-age population rising, the New Zealand economy is headed for a "great, gray blowout," as a recent New Zealand Herald headline put it. Their disagreements are not over whether to cut state pensions, but how deep and sudden the cuts should be.

In face of the growing opposition to the government proposal, one of its supporters, Prime Minister James Bolger of the National Party, said July 11 that "all the polls up to now have suggested it will be a `no' vote.

"The real question," he continued, "is what do we do then? In my absolute, unqualified opinion it's not sustainable to go on as is with a universal scheme at the present rate into the future." Bolger suggested resurrecting the multiparty Superannuation Accord. The suggestion was reportedly greeted with cautious optimism by the opposition Labour Party and the Alliance.

James Robb is a member of the Meatworkers Union in Auckland, New Zealand.  
 
 
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