Scoop Election 08: edited by Gordon Campbell

Gordon Campbell on the affordability of state support for the elderly

June 12th, 2012

The public debate on raising the entitlement age of National Superannuation is still tending to be couched in terms of affordability and generational fairness. Can and should the baby boomers continue to qualify for pensions (a) at 65 and (b) at the current level of payment, given that such relative generosity is not sustainable, and will be unavailable to the generations who are currently footing the bill? And after all, other countries – including Australia – are already pushing up the retirement age.

That seems a fairly narrow way of approaching the issue. Some, like Prime Minister John Key, have pointed out that while 65 may be a relatively young age for white collar workers to retire, this is not the case for the significant minority who have been doing manual work all their lives. More to the point, the debate on raising the retirement age is rarely being couched in terms of the employment trends. It is not simply that jobs are disappearing from the public service that used to employ some older workers in their sunset years – the file clerks, the messengers, the tea trolley attendants etc. Technological change and outsourcing is also sweeping through middle class white collar occupations – such that raising the retirement age from 65 to 67 will be only a nominal change in state dependence, because more and more people are going to be in de facto retirement from their mid 40s onwards. Skills shortages will only continue to provide jobs for such people if their skills are held to be relevant – and in many white collar service occupations, the skill sets required have a very high churn rate. People in most service jobs have to look young, cost less and not require re-training.

Therefore, the savings for the state will not be in X numbers for whom retirement is deferred from 65 to 67, but in the difference between the payments for unemployment support and the payments for pension support – and if and when that difference creates hardship, the burden of care for the middle aged to elderly unemployed will fall upon the same generations X and Y who are currently facing the retirement bill for the baby boomers.

What I’m getting at is that there’s no easy way of easing the costs involved in meeting the burden of care for our ageing population. If we simply raise the entitlement age and/or cut the pension – and National did both in the 1990s under the Shipley administration – while ignoring the employment context, we will simply privatise the social, psychological and financial costs of care, and hand the responsibility over to families. The current levels of unemployment of people in their 50s is likely to grow, despite the optimism of this recent NZ Herald report, which rarther blithely assumes that ageing boomers will ‘ have’ to be employed. The underlying reality though, is quite bleak:

A West Auckland man said he had unsuccessfully applied for 60 jobs since he was made redundant in March as a manufacturing company’s health and safety official. John Riddell reached the interview stage with only three employers and felt the rejection letters were probably because he was 58. Since losing his job, he had met other West Auckland residents, including engineers, bankers and a nurse, who were unable to find jobs. Mr Riddell’s plight is no surprise to Waikato University professor of social gerontology Peggy Koopman-Boyden.

“When things get tougher, people get marginalised and what we call the reserve army is formed. People are there for the good time, but when it’s a bad time they get sent back again. But we need to get older people working because we are going to be short of certain skills.”

Right. And those skills will have to be (a) relevant (b) affordable and (c) pay a wage that will compensate. The likelihood is that we will see a lot more grey-haired people flipping burgers at fast food outlets, and working minimum wage jobs in rest homes. And they will be the lucky ones.

Hekia Parata, Fall Girl

According to Prime Minister John Key at his post Cabinet press conference yesterday, the reduction in class sizes trade-off was the brainchild of the newly appointed Education Minister Hekia Parata.

Cabinet, Key said, had looked at the idea before and rejected it. Parata had picked it up and run with it. This was an interesting and elegant way of sheeting home the blame. Essentially, it made the new Minister look a little as though she’d fallen for the policy equivalent of a Nigerian banking scam.

In which case, it was pretty clear who the Nigerians were in this instance. Treasury had floated the idea of a trade-off between class sizes and teacher performance measures before, and new Treasury Secretary Gabriel Makhlouf made his continued enthusiasm for this approach very clear in March:

The school system is “failing some students” and could be improved by lifting class sizes by two or three students and using the savings for improved teacher quality, Treasury Secretary Gabriel Makhlouf says…. Teachers should be assessed across “a range of tools” to develop, support and reward them, he said.

Treasury today also released a background paper on lifting student achievement…”Increasing student/teacher ratios, and consolidation of the school network, can free up funding that could be used to support initiatives to enhance the quality of teaching, such as more systemic use of value-add data and a more professionalised workforce,” the paper said.

Which would suggest Parata didn’t think of this idea entirely by herself, and that Finance Minister Bill English should be wearing some share of the blame. Success though, has many fathers – but whenever it can be done, you can rely on failure being sheeted home to a sole (or solo) mother.

ENDS

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    1. 5 Responses to “Gordon Campbell on the affordability of state support for the elderly”

    2. By Betty Smith on Jun 12, 2012 | Reply

      Shame on you lot – I’m a baby boomer as is my husband. Our parents worked like trojans and passed on their workability to their families. We have contributed to the tax system since the age of 16/18, so why shouldn’t we be supported going into our retirement years – heaven knows, we’ve paid one heck of a lot of tax in those years. There is unfortunately a generation or two coming through who don’t have work ethic, and we probably won’t be around to see them putting their hands out – again!! Have a heart and see the woods for the trees.

    3. By Dee on Jun 12, 2012 | Reply

      Exactly right Gordon, that is exactly where white collar workers wind up in their fifties, in blue collar jobs. Which are OK, but don’t pay as well.

    4. By Andrew R on Jun 12, 2012 | Reply

      You are right Gordon that the advocacy around raising the retirement age is very simplistic. Pension can be supported even at lower ages if we (collectively) agree to do that instead of spending on something else. As for the projected future costs I can’t understand how much allowance is made for the effect of the likes of Kiwisaver, should it be compulsory, how does one then deal with those not working, does that mean a lower pension level in the future ….
      I am not optimistic though that any inter-party agreement on superannuation will go much beyond looking at the slogans.

    5. By Jason on Jun 13, 2012 | Reply

      Hi Gordon, perhaps the time for gov’ment to introduce something like the German minijob?
      http://www.expatica.com/de/news/news_focus/Hardup-German-pensioners-forced-back-to-work-_195676.html
      Of course without a magical increase in the economy’s demand, improvements in the employment prospects of the elderly will just be at the expense of those dang pesky youth.

    6. By Andrew R on Jun 14, 2012 | Reply

      No Right Turn today noted an article from Micheal Littlewood of the Retirement Policy and Research Centre of the University of Auckland a very interesting commentary on pensions and our options for the future. Go to http://www.rprc.auckland.ac.nz then chose publications then pensioncommenary articles then select “we all have to talk about New Zealand superannuation”

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