Claire Dale: How to take the interests of future generations into account

The interests of the current and future generations have to be linked and considered together on a number of issues. Photo / Supplied

OPINION

Back to the future again

A critical issue not addressed by the Retirement Commission, the proposed Aged Care Commission or any other commission, is intergenerational equity – essentially ensuring fair and just treatment and opportunities for different generations.

Given that we have at least 20 commissions already established in Aotearoa New Zealand, that is a remarkable oversight that could be addressed by instituting a new, revised Commission for the Future.

The original Commission for the Future was established in 1977 and abolished in 1982. Its functions included studying the possibilities for the long-term economic and social development of New Zealand, with particular reference to developments in science and technology.

The commission's findings were to be published to promote discussion and educate the general public about the future. But the remit of that commission was inward and academic, in contrast to the legislation introduced by the Welsh Government's 'Well-being of Future Generations (Wales) Act 2015'.

There, public bodies listed in the Act must ensure their decision-making takes into account the likely impact on people living in the future.

The Act established Public Services Boards, tasked with improving the economic, social, environmental and cultural wellbeing of their area. It also established a Future Generations Commissioner to safeguard the interests of future generations, and support public bodies to work towards achieving well-being goals.

In New Zealand as in Wales, explicit constitutional recognition of future generations could and should assist in ensuring that rights today are not unduly valued over rights tomorrow.

Intergenerational inequity occurs when the young are deprived of opportunities for their wellbeing by over-consumption of resources by earlier generations, and by excessive allocation of resources to the elderly. On these definitions, intergenerational inequity is taking place in New Zealand.

For example, current taxpayers fund compulsory education, public healthcare, and the universal age pension: New Zealand Superannuation (NZS). Our ageing population means government spending on compulsory education is projected to reduce over time.

In stark contrast, older people currently make up 15 per cent of the population, but use 42 per cent of health services and by 2025 health expenditure on those aged 65 and over is projected to reach 50 per cent.

Spending on NZS is also projected to increase significantly, according to Treasury, from 4.2 per cent of GDP in 2009 to 7.7 per cent by 2061, and health expenditure is likely to increase from 6.7 per cent of GDP in 2009 to 10.6 per cent in 2061. The ageing population accounts for around one-third of the projected increase.

The emerging social distress around child poverty, increasing inequality, inadequate social support and unaffordable housing, as documented by the Welfare Expert Advisory Group in 2019, also suggests current financial policies are unsustainable and intergenerationally inequitable.

However, caution must be exercised regarding the relative positions of children and older New Zealanders.

Dr Claire Dale. Photo / supplied

As the Ministry of Social Development Statistician Bryan Perry wrote in 2019, lower poverty rates among the elderly arise from the combination of NZS plus the very high rates of mortgage-free tenure. Older people who rent privately have a hardship rate of 12 per cent, a little less than children (13 per cent) but much higher than the overall 65-plus rate of 3 per cent. Increasingly the prospect of retiring with a mortgage-free home is disappearing.

Older people contribute via work and paying tax. Employment rates for 65-69 year olds increased from 16 per cent in 2000 to 44 per cent in 2017. By 2033, seniors will make up around 10.6 per cent per cent of the workforce, up from 6.2 per cent of the workforce now. While this is good news we must question how many seniors are staying in the workforce out of financial necessity rather than choice.

With almost 24 per cent of our workforce aged 55-plus, there are only four to five teachers/nurses to replace every 10 that will retire. Similarly, a 2016 workforce survey by the Royal New Zealand College of General Practitioners found that 44 per cent of all GPs plan to retire within 10 years (up from 36 per cent in 2014).

More bad news is revealed in the unemployment rates of young people. In the June 2021 quarter, the proportion of people aged 15-24 years who were not in employment, education, or training was 10.8 per cent. While this showed a drop from 11.8 per cent from the June 2020 quarter, it still means around 60,000 young people were at risk of lifetime scarring from the NEET experience.

Labour's pledge in 2017 to introduce an Aged Care Commissioner to protect older Kiwis from breaches in standards of care was addressed in the 2021 Budget. However, an Aged Care Commissioner does not address intergenerational equity.

We need a parliamentary Commission for the Future to calculate the impact current issues could have on people living in the future. That commission could be tasked with protecting and improving the economic, social, environmental and cultural wellbeing of New Zealand, while ensuring it is globally responsible.

As in Wales, a statutory Future Generations Commissioner could act as a guardian for the interests of future generations. Given the reality of the ageing population, such a legislated requirement would assist in ensuring and providing intergenerational equity.

The ageing of the population that is already under way compounds other dramatic and enduring endogenous and exogenous changes.

New Zealand is in the grip of a pandemic and, like the rest of the world, struggling to look past the precarious present and address climate change.

A government agency that takes a long view of the way different generations will be affected in the future and plans for more equitable outcomes is desperately needed.

Only then can we ensure intergenerational equity by guarding the future against the claims of the present.

- Dr M Claire Dale, Research Fellow, Retirement Policy and Research Centre, University of Auckland.