HARBOUR CITY ROTARY CLUBEducation
You've asked me to speak tonight on 'any topical subject'. Topicality, when it comes to politics, can be a tricky matter - what was topical last week may well be, as they say, this week's fish and chip paper.
I heard a neat twist by David Lange on that saying - referring to former fish retailer and now Australian-in-the-news Pauline Hansen he commented that "yesterday's fish and chip wrapper is today's news."
Some issues in politics last longer than a week - tonight I want to cover MMP and Superannuation - two topics that look like remaining pretty hot for some time yet.
After the first two sittings of the House I wrote a " term report" column which was published in several papers. I received a surprising amount of feedback on both. In the columns I offered to post out Hansard transcripts of some recent debates so people could see the standard. A surprisingly large number of people took me up on that.
This might have been a positive - was this a greater interest in Parliament? I hoped so, but unfortunately I think it reflected people wanting to know how bad it was, not how good.
For me, government's role is to achieve our desired social and economic goals. We are not there for point-scoring and political opportunism. We are there for the good government of New Zealand.
Many people thought that we were changing more than the way we elect our Parliament when they voted for MMP. They were thinking we might change the way we operate our Parliament, to add to the good government role.
MMP was oversold - advocates painted a picture of a more consensual, less aggressive, more consultative, cooperative system. Members gently smiling and agreeing - even if agreeing to disagree. MMP could never deliver up to those expectations.
MMP was supposed to give people more idea about what would happen in an election. It did the reverse. Under First Past the Post the winning party was able to govern because it won far more seats than its proportion of the votes. It won on its own and usually convincingly. Therefore voters could vote out a Government they did not like and vote in a Government they did like. This meant a party could be held accountable for the detail of its commitments
Under MMP, the election just tells parties the cards they have for the post-election discussion. A party cannot know how much of its policy it can demand of the other parties it is discussing coalition with, until it knows how much support it has amongst the public.
The performance of Parliament in this new era has been way less than most expected. We certainly see a wider range of opinions, more women and more ethnic diversity in the House - that's a good thing - but we certainly are not seeing a more moderate standard of behaviour, more consensus-style, non-partisan debate, or any lack of political opportunism.
Behaviour in the House has deteriorated. True debate is rare. Real debate is one of the things Parliament is there for. It should be relevant and focused on the issues. I object to the current climate of senseless filibustering, endless point scoring, name-calling, deliberate time-wasting and even speeches pre-written by advisors and delivered without conviction. As an MP and as Leader of the House, I find this intellectually demeaning and unbelievably frustrating.
MMP delivered us some elements we do not need. Like 120 MPs. All those extra MPs have not improved legislation a jot. And extra MPs are costly.
The Alamein Kopu case has raised a number of constitutional, ethical, moral and legal questions for MPs, constitutional experts and the media. Does someone who entered the House of Representatives thanks to the support gained through their position on a Party List, have a mandate to remain in Parliament as an Independent MP.
Posing the question is easy. The answer requires some thinking through. The simple solution is to pass a law making all list MPs resign when they leave their party. A simple and clean reaction.
In the Kopu case the situation is reasonably straightforward. The MP resigned from her party.
But what if a List MP was standing up to her or his party when it was pursuing something seen as against the party's core philosophy? This could have easily happened. Say Labour had joined New Zealand First instead of us - it was a near-run thing. That Coalition could not have survived without Alliance votes and inevitably Alliance MPs would have had to vote for things against their philosophy. In that case an Alliance List MP could have said, "No dice". The party would have said, "Vote for us or else". In defying their party, they were booted out. Should they then resign from Parliament?
If we passed the 'no-ifs, no buts' resignation law, that MP would end up being booted out of Parliament. The law could be used as the ultimate tool for political party discipline. It could end up limiting the basic and most fundamental constitutional driver of the New Zealand's Parliament and political system - that of free speech.
And what about the question of treating List MPs as "second class". Do all MPs deserve the same conditions and treatment once they enter Parliament, or are some more equal than others?
The issues were looked at quite carefully in 1993 by the select committee examining the MMP electoral law change. The committee concluded that any resignations by List MPs would be rare. If it came up with a law defining how political parties had to deal with a resignation that it would give parties too much power over their members.
The decision of the Privileges Committee will be interesting.
That issue is just one way MMP has failed to live up to expectations.
Given that it is little wonder that public enthusiasm is waning. A recent public opinion poll seemed to show that only 31% of voters now back the new system. There is a deep disappointment at what is happening, not in a party political sense, but to our democracy overall.
Before we simply revert to the old FPP system though, I would like to see us look more carefully at what a small, multicultural, South Pacific nation needs to achieve good government.
Our present arrangement was a product of long-term development over a thousand years in Britain. That is a country of 55 million people - we are 3.6 million. We have unique characteristics. While respecting tradition is sensible, clinging to tradition for its own sake is not. We should think now about New Zealand's needs in the 21st Century. Thinking that through is challenging, interesting and even exhilarating - I have some ideas, but they would make up a speech on their own.
The second subject I want to cover tonight is the upcoming referendum on the Retirement Savings Scheme - compulsory superannuation. My view on super is well known. I personally do not support the compulsory proposal. I support the voluntary savings option recommended by the Todd Taskforce.
A bit of history puts it in perspective.
Since I 'came out' - if I can safely use that phrase these days! - against compulsory super and in favour of an Accord process, my office has received a lot of letters of support.
One of the more entertaining took an historical view. It was headed "the Ghost of Harry Atkinson", and reminded me that the first hint of compulsory super in New Zealand was in 1882 when Harry Atkinson was colonial treasurer.
He advanced a scheme of compulsory levies, collected from workers by employers and paid into a national insurance fund. It was to cover a pension of ten shillings a week and a 'sickness benefit' of around one pound two and six a week. (More worthy to be sick than old, it seems.) The scheme received a chilly reception from the country, and in Parliament his speech was met with "scant attention and ribald laughter". Sounds horribly like MMP these days!
In 1898 'King Dick' Richard Seddon introduced the Old Age Pension Act, based on a system of financing pensions out of general taxation. That is the basic approach that has more or less lasted till now. Seddon also put his energies into promoting "An Act to Encourage the Making of Provision for Old Age" - a voluntary system that sounds remarkably similar to the Retirement Commissioner's brief today.
Compulsory Super was next raised seriously in 1935 by J.G. Coates, and again in the early Seventies by the Labour Government.
From then on the question of retirement income has been kicked around, jumped on, and thrown high and wide by various political parties. It was to stop it being such a political football that we set up the multi-party Accord process in 1993.
The Accord rose from the Todd Taskforce on Retirement income in 1992. That Taskforce examined in great detail the three basic options for retirement income - an improved version of the voluntary savings/public provision system, a compulsory saving regime, and the use of tax incentives to encourage savings.
They concluded that the fairest and best system for New Zealand's future was an improved version of the voluntary savings/public provision system, with small changes over time to respond to changing economic and social realities. The first 'tweakings' would not be necessary until about 2015, they said - and confirmed that in their report of a couple of weeks back.
The original Todd Taskforce also recommended that political parties get together and agree to develop a political consensus on superannuation. This we did, and after long and often tiring discussions - (diplomatic speak) - we came to an agreement that superannuation was too important to continue to be a political football.
I support the Accord approach. I use the word approach advisedly, because the Accord is more than just a particular policy setting - it is a conceptual framework for a retirement income policy, and a process for regularly adjusting the specific settings within the framework on advice from technical experts, to make certain it remains sustainable.
I strongly supported the concept then, and, in spite of being called a dreamer for doing so by some, I still do. If public pressure gets behind the idea, it will be much harder for any political group to resist.
Now we have a referendum on compulsory super next month. Whatever its outcome we will need some form of agreement between all the parties to make it work and ensure that our retirement income system is not subjected to the confidence-sapping effects of continued, politically-driven changes.
As I have said, I do not accept that compulsory superannuation is the best way for New Zealand to go.
For a start, I do not believe we can sit here in 1997 and design a public policy that will work well 50 years out. The world of the future will be nothing like it is now. Take Budgets these days. They are planned in 3-year cycles - and even in that short a time what is predicted for the 'out years' needs to be changed to fit what actually happens economically over that short a period. With 50-odd years for forecasters to play with, any figures floated now could be out by miles.
Just look how much life has changed over the last fifty years. Then, most people went to Britain by ship. Now there are no regular passenger ships. Flying was an adventure few people afforded. You had to have a doctor's prescription to buy margerine. Even thirty years ago shops were never open at weekends - if you forgot your Mum's birthday till too late you were in real trouble, unless she wanted a gallon of motor oil. Milk came in glass and only one type. Home appliances and cars were infinitely simpler. Computers were the size of rooms - no chance of one on your desk. Even teachers rode bikes to school - pushbikes, not motor.
In my school days Bob Dylan wrote radical protest songs, the Beatles were long- haired ragamuffins, the Rolling Stones dangerous and wild. I remember being told firmly by our music teacher this uncivilised noise was not music. Recently I visited a school and had the pupils sing for me in a mini concert: first, "Here comes the sun" - a Beatles number; then "Blowin' in the wind" - a Bob Dylan anthem, and "Ruby Tuesday" - a now standard from none other than those wild radicals, The Rolling Stones. How the world has changed.
It's not going to stop. The Dominion recently published a chart of what we might expect over the next 50 years.
By 2001 we'll have a 'virtual' company without physical headquarters, whose workers telecommute, on the Fortune 500 list. In 2002, we will be able to control our shapes with a 'fat destroying' pill - something that will be hugely acclaimed if my staff's occasional morning tea conversations are any guide! By 2004, we will have an international space station, and a year later animals specifically bred for organ transplants. Jump forward to 2015 for us to have pills that provide a person's total nutritional needs. They may fail though, because - according to the Dominion - people enjoy cooking and eating too much. Further on, humans on Mars, and later, microscopic machines that will travel round inside the body to repair cells and tackle disease. And by 2055 we will have "dial a mood" machines - machines that can trigger whatever emotion you want by stimulating the brain's mood centres.
But even those scientific forecasters aren't predicting the world economies of the future.
The super debate is not really a case of whose figures are right - or even a case of savings versus taxes. The guts of this issue is economic. It is our economy that pays for everything - health, education, welfare or superannuation. It makes no difference - we can only distribute the wealth we create. We should be addressing the wider question of what is sustainable for the economy as a whole.
That is why sound economic management is so important.
What we can afford in 40 years time for retirement income will depend on the state of the economy in 40 years time. The best way to ensure the welfare of future generations as well as our own is to run our economy well.
Much has been made of the tax reduction argument. But now or in the future tax cuts depend on the ability of the economy to afford them; they will happen if social and economic conditions allow. No one in this debate can promise tax reductions to win voters to either side.
One of the compulsory scheme's big disadvantages is the effect it will have on rural districts like my electorate. The huge sums of investment money collected will be in the hands of large insurance companies and fund managers. Remember, up to 8 percent of all capital income would be collected - that's a large part of the investment in smaller businesses that provide much of the employment in New Zealand.
The people managing these superannuation funds prefer larger, one-off type of investments. I can't see them being interested in putting money into such things as a homestay in the Wairarapa, a West Coast rural enterprise making exportable food products from local produce, an antique business in Otago - or even a vineyard in Martinborough! Fund managers prefer equities in big companies, bond and finance market investments and big property investments in the main. Capital will go into larger industries at the expense of small businesses.
The scheme's unfair in other ways too. Others have already pointed that it favours high-income earners at the expense of low. Those on a high income will quickly reach their $120,000 target. They then keep their 8% tax cut to spend as they wish. Low-income earners will probably have to keep juggling day-to-day priorities to pay 8% till the end of their working life - to be able to live on the fabulous sum of $8,352 a year.
Many parents feel that feeding, clothing and educating their children; paying the rent or mortgage, power bills, repairs and so on is more of a priority than retirement saving, at least in the early part of their life. Compulsion takes away that choice.
Both sides of the debate claim that the other's preference limits choice. In one way we're both right. A compulsory, savings-based scheme means you have no choice but to contribute - if you don't the IRD will get you. And the current scheme is funded by taxes - if you don't pay your taxes the IRD will get you!
Then there's the argument that a savings-based regime is invulnerable to political change in future. No Government would dare interfere, the argument goes, with these private nest eggs. I simply do not believe that - our history shows otherwise.
The proposed compulsory scheme is just as susceptible to political tampering as any other. It has its own form of targeting too - given the outcry over the surcharge it's surprising hordes haven't objected to the fact that the more you save the less you're entitled to via taxpayer funding.
Compliance costs of a compulsory scheme are likely to be high. We will need a plethora of anti-avoidance measures and officials to ensure everyone pays their fair share and doesn't 'divert' money in various ingenious ways to set them themselves up to get the government's 'top-up'. There is also the cost of having your funds and annuity managed for you.
One of the arguments used against the Accord option is that it will need to be changed in the future.
My view has always been that it was not so much the concept of targeting publicly-funded retirement income that people objected to, but the failure to deliver on commitments solemnly made. If there is a lesson in that experience, it is that it is a mistake to rely on, or make commitments, without really knowing the situation being faced. Better to promise to run the country properly than to make a specific commitment that turns out to be unaffordable.
But clearly I acknowledge that as the proportion of those retired to those in the workforce increases dramatically next century, non-targeted retirement income will become increasingly unaffordable. When that time comes adjustments will need to be made.
To me, the logical approach is to introduce a degree of universal super so all who pay taxes get a return when their time comes to retire. People would also save for themselves, as far as possible. And for those without enough, a means-tested age benefit would cover the gap.
Whatever your views - and everyone will have their own - it's important to seek out and consider all the issues before filling in those voting papers next month. The $5million campaign promoting the compulsory scheme is giving only one side of the story.
People must vote in this referendum and make their views known loudly. Even a small turnout will be binding - all New Zealanders should be sure to have their say on the future of their superannuation.
I'll close with something another famous Winston said - "Saving is a very fine thing. Especially when your parents have done it for you!"
Thank you for the opportunity to speak to you this evening.