Thursday, June 14, 2012

What superannuation crisis?

Labour chose this week to resume the attack on its toxic superannuation policy, promising its younger supporters to fuck them over in exchange for their vote (and then they wonder why people give up voting or switch to the Greens). Meanwhile, an analysis from the University of Auckland's Retirement Policy and Research Centre shows that we don't actually face a crisis [PDF]. Sure, the cost of superannuation will double in the long-term, from 4.7% at present to roughly 8% in 2050 (pretax; taxation reduces that by about 1%). But we might want to look at that in historical perspective:


So, in 2050, we're projected to be paying only 1% of GDP more in superannuation than we were paying in 1990. Quelle horreur! This is not a difference to be terrified of, and it is easily manageable with a modest increase in taxation, either now or in the future (though that perhaps is exactly what those pushing for change are frightened of: higher taxes).

The international comparison is equally non-terrifying:


Yes, that's right: in 2050, we will be spending as much on superannuation (as a proportion of GDP) as most European countries - you know, the ones Labour supposedly aspires to make us like - spend now. Again, this is nothing to be afraid of, and nothing that can't be dealt with by having a slightly larger state. The fact that Labour is afraid of that prospect is a telling indicator of what sort of a party it is at the moment.