Nicola Willis: Finance Minister on the OECD report looking at the impact of our current superannuation settings on the economy

The Finance Minister says the Government's going to have to do something about Superannuation.  

An OECD report warns if current policy settings continue, we could be spending 5% more of our GDP on health, long-term care, and pensions by 2060. 

Minister Nicola Willis says the cost for superannuation is going up billions of dollars, while there are fewer workers for every pensioner.  

She told Mike Hosking the cost is also rising as a proportion of taxes.  

Willis says it will soon account for 20%, and every dollar spent isn't available for education, health, and infrastructure. 

LISTEN ABOVE  

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So the OECD had a word about New Zealand ink yesterday.
They've weighed in on the super debate. Of course they
want to eligibility link to life expectancy. We had eventually
to sixty nine. Also some main means testing for the
top ten percent of burners. Nicola Willis, Finance Minister, back
with us morning, Good morning Mike. How was Singapore?

Speaker 2 (00:16):
It was very positive and that's an excellent relationship we
have with a fast growing country. We're already doing eleven
billion dollars worth of trade and there's potential to grow
a lot more. Weak. Sheequlls KIWI jobs better and comes
for us good.

Speaker 1 (00:28):
I am f OECD un everyone's got to say on
us do we care?

Speaker 2 (00:33):
Well, Look, they offer an external perspective, which I think
is useful, not to just be self dwelling and look
at our own navels. Obviously, anything they say, we then
need to decide what suits us in our country and
our national interests. But I enjoy policy insights from others.

Speaker 1 (00:49):
What do you I mean they say we should be
doing something about superannuation, We're not going to. So is
at the beginning of the middle and the end of it.

Speaker 2 (00:56):
Well, no, we are going to have to do something.
If you're sensible, you listen to these facts and you think, well,
that's not sustainable. In the nineteen sixties, there were around
seven New Zealanders of working age for every person aged
sixty five or older. Today there are four, and by
twenty sixty five there will only be two. So that

(01:17):
burden on our tax payers is increasing significantly. Already, between
last year and the end of the fiscal period, the
cost of New Zealand superannuation will increase by about six
billion dollars a year. It's rising as a proportion of
what we tax you for, so it's currently just over
sixteen percent, it's going to rise to over twenty percent.

(01:38):
And every dollar we're spending on superannuation is a dollar
not available forisfcation, for health, for infrastructure. So gradually, over
change over time, some changes will need to be made.
They don't need to be as dramatic as the OECD suggests,
but some adjustments will be needed.

Speaker 1 (01:53):
More pressing for me was when he said electricity or
power in this country is no longer cheap. I mean,
surely that's an alarm bell, isn't it.

Speaker 2 (02:00):
It is an alarm bell, and their analysis is the
same as ours, which is the problem is with gas
drying up, that creates a risk to everyone wanting to
invest in generation and so in the absence of some
backup firming capacity for although when those hydro lakes run low,
we can only expect the price to keep going up.
So the report suggests that yep an LNG import facility

(02:23):
would be a good transition tool so that we don't
run out in the short term, and then over the
long term technology will help us. There'll be better batteries,
our hydro facilities will be able to do more. But
in the meantime we've got an immediate issue and if
we don't solve it, we can't expect the investment and
therefore the lower prices we all want.

Speaker 1 (02:41):
Is the investment to your eye at the moment, going
to bring us abundance, which is what Richard Preble was
talking about earlier on this week, abundance versus constraint. Do
we have abundance? Will we get abundance?

Speaker 2 (02:53):
We can have abundance because unlike many other countries, we
have the capacity to create a lot more renewable energy.
Already seen a burg uptick in the amount of solar
farms and wind farms going up. But the constraint on that,
ironically is if they don't think they can get back
up generation when their sun isn't shining or their wind
isn't blowing, then they're reluctant to invest because what is

(03:15):
the products they will have to sell to consumers. So
what the analysis says is actually, if you know you've
got back up, whether it's that coal being burned at Huntley,
whether it's that LMG facility, or whether in time it's
more natural gas, then others will be more prepared to
invest in renewable energy and you can get to abundance.
That's our vision. We want an electrified economy. We want

(03:38):
more renewable energy, but giving people the confidence to invest
is the key factor.

Speaker 1 (03:42):
You have a good weekend. Thank Lo Willi's Finance minister.
For more from the mi Casking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio