KEY POINTS:
This budget exonerates Winston Peters. A few years ago, we had a referendum on his compulsory superannuation scheme. Every politician ridiculed even the concept of such nonsense. When New Zealand First went into coalition with the National Party in 1996, Jim Bolger indulged Peters and agreed to a non-binding referendum. We gave it the big cross. The only people in favour of the scheme were New Zealand First members, mostly as a sign of loyalty to their leader, as opposed to an expression of their convictions.
So while no one is admitting it, Peters has been vindicated. He must be smirking to himself when he hears his political colleagues now claiming the wonders of private superannuation. The bosses' representatives, who are spewing over the fact that they have to make a contribution, should be ashamed of themselves. All the experts complain about New Zealanders' lack of savings and believe that a compulsory savings scheme is necessary. Michael Cullen, obliviously, is in agreement with that view and has introduced what is, in effect, a compulsory individualised savings scheme for workers.
The KiwiSaver idea is sold on the basis of securing pensions for retired workers. But what it really signals is that the welfare state, as we know it, is finished. The principle of superannuation and other societal benefits is now being replaced by individual, user-pay schemes run by private investment corporations.
Effectively, the compulsory levy on workers for their own pensions is intended to reduce spending with the hoped-for side effects of reducing inflation. The money can be used by professional investors to buy company shares and properties. But the Government has put this money into private, corporate hands to invest in businesses - mostly overseas, I would suspect - and properties, both of which would have dubious benefit to the workers, who have entrusted their money to these institutions. The Government and its allied parties have privatised superannuation and given its control to large, off-shore financial institutions.
The expected 4 per cent contribution from workers is effectively a tax increase for something they have previously received as a right. This superannuation tax comes in addition to the education tax that most tertiary graduates are required to pay from their salaries in addition to general income tax.
Remember, a decade or so ago, the outcry by senior citizens who formed themselves into Grey Power? They ran a successful campaign to dump a proposed secondary tax on their superannuation in circumstances when they had other income. The situation we have now is less fair. New Zealanders over pension age - such as Winston Peters, Jim Anderton and Don Brash - who are still working or have a sizeable income and assets, receive their standard retirement pension from the State. Yet younger generations are expected to pay up to 10 per cent of their income to cover their future superannuation and past education, while those three received theirs through general taxation.
There is a deep unfairness towards the younger generation by the current ruling generation that is reinforced by this Budget. That ruling generation bludged off their parents for all their benefits when younger and is now making its children and grandchildren pay for these benefits.
Anderton summed the budget up best when he said it was very pro-business. This former champion of the workers wasn't being ironic. This Government prides itself on being the most business-friendly. Even the World Bank gives our Government first place as the most friendly to business in the world. So it must be very distressing for the leaders of our mainstream workers' party to be attacked by business interests when giving them everything they've asked for in this Budget.
The corporates got themselves a $1 billion tax cut, yet they complain about having to make a KiwiSaver contribution to their employees. However, while workers must pay their own money into a KiwiSaver scheme, employers get $1000 towards their contribution.
An employer paying their employee, say, $25,000 a year (and most do) and contributing 4 per cent to their KiwiSaver gets a tax-break for all that contribution, effectively paying nothing. They also get a 10 per cent cut in their company tax. Business owners should make Cullen head of the Business Roundtable.
The breathtaking paradox is that under a workers' government, corporates get tax cuts, while workers effectively receive a tax increase. The tax cuts for businesses could have been used to fund electric trains in Auckland, solving the infrastructure and transport problems in our biggest city. Big businesses claim Auckland's gridlock is costing them millions of dollars each year. Yet instead of the Government using $1 billion of the tax surplus for transport, they've given it as a tax cut to business and then imposed a 10c levy on petrol.
Meanwhile, workers get to pay more for their superannuation, pay off their education loans, pay the increased cost of petrol and use the rest of their wage to meet exorbitant and increasing rents and cannot afford to buy their own homes.
Mainstream commentary is praising the Government on the budget. It seems the political consensus is: Whatever is good for corporates is good for New Zealand, and workers don't matter any more.
