Cameron Bagrie: independent economist on whether New Zealand's Superannuation needs to be reformed

An economist says New Zealand needs to have a tough conversation about superannuation.

Finance Minister Nicola Willis yesterday told Newstalk ZB the scheme needs to become sustainable and a debate about age eligibility will be needed eventually. 

Bagrie Economics says raising the age makes sense, with the average life expectancy up a lot.

Cameron Bagrie says we can't keep kicking the can down the road.

"More than 50 percent of all welfare spending is going towards New Zealand's Superannuation - and some people need that money, but there's a chunk of society that I don't think need that money and they're double dipping."

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Episode Transcript

Speaker 1 (00:00):
So the Finance Minister Nichola Willis was on this program
last night and she says she would like to have
a discussion about how we're going to pay for our
superannuation in the future. But she quick to point out
National hasn't got a position on this at the moment.
Treasury has raised concerns about the increasingly large bill for
New Zealand Super and the independent economist Cameron Baggery is
with me to discuss Cameron, good afternoon.

Speaker 2 (00:22):
Good afternoon, right, good to see you, Good to.

Speaker 1 (00:24):
Talk to you. It's been a while. How urgent is
this discussion around the future of MS SUPER.

Speaker 2 (00:31):
Well, I guess the longer we keep kicking the ken
down the road, the bigger the economic adjustment or the
shock we're going to face down the track in regard
to the tough choices we're going to make. You know,
we should have been biting into this in the nineteen nineties,
but what we keep on doing, Ryan is that no
one's got I guess what you call the guts to

(00:52):
make a bit of a stand. But if you look
at all the numbers, he's hell on super innuation in
combination with the fiscal cost of an aging population which
health care costs is clearly not sustainable for the next
sort of forty years. Treasury data statement on the long
term fiscal position, they've been saying for a long time,
government debt on a status quo is going to end
up towards two hundred percent of GDP. Despite those warnings,

(01:15):
we're still not prepared to buy the bullet and put
some alternative options on the table because the status quo
the numbers don't stack up.

Speaker 1 (01:21):
It's allectually obviously very unpopular thing to do. But as
a as a relatively younger person, I don't expect that
by the time I get there that I'm going to
be getting the super that my parents are going to
be getting or that my grandma is getting. Right now,
what is better? I mean, you've argued for means testing.
Is that better than increasing the age?

Speaker 2 (01:40):
Well, I think we're going to need accommodation of policies.
Increasing the age makes an awful lot of sense because
we're living longer. When you see on separation first coman
in the nineteen fifty here the average age life expectancy
for a male was sixty seven and for a female
was seventy one, And now it's an ex of eighty
for both, so you're spending the bigger chunk of your

(02:03):
life over the age of sixty five, which just puts
more pressure on the public Purson. I think New zeal
superannuation should be leaked to life expectancy, and life expectancy
to be fair, is different across different ickness groups, so
you're not just going to have a female and a
male band. But I don't think that that in itself
is going to be sufficient. I view the wealthy state

(02:25):
is there for the needy. That's where it needs to
get prioritized. We've got now more than fifty percent of
le wealthy is spending. It's going towards New Zealand superannuation,
and some people need that money. But there's a chunk
of society that I don't think need that money, and
they're double dipping. And I know that they used the
argument that I've paid my taxes all my life. Well sorry,
We're going to face some tough choices going forward because

(02:47):
if we expect the state is quite to work, then
someone's going to have to pay on the other side.
And the issue is who's going to pay on the
other side.

Speaker 1 (02:54):
Cavin, Thank you Cameron Bagri independent economists from Bagri Economics.
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