Tuesday 10th Oct 2000

Rodney Hide

Media Release -- Economy

Treasury’s briefing on the Government’s proposed “pre-funding” of Super payments raised more questions than answers, said ACT Finance spokesman Rodney Hide.

“The ACT party will be seeking answers to these questions before committing support to Dr Cullen’s proposal.

“The Treasury briefing made plain what ACT has maintained all along, so-called ‘pre-funding’ does not alter the economics or affordability of super over time. ‘Pre-funding’ is simply a financial mechanism that spreads the increasing cost of Super over a longer time frame. The forty year costs of Super will now be spread over one hundred years.

“As the Minister acknowledges in his press statement, ‘Eventually [the Fund] will run down entirely’. This is not a “pre-funding” scheme at all. It is simply a cost-smoothing scheme. Super remains ‘pay as you go’ as Treasury briefing papers explain “the rolling horizon methodology results in a smooth- pay-as-you-go system’.

“However, the so-called “pre-funding” scheme does force politicians to view super policy over a rolling forty-year period. This long-term view of Super is what ACT has been advocating since the ACT party was founded.

“The ACT party agrees with National’s Bill English that the proposal should be independently tested by a panel of experts. It’s a big change that is being proposed and it is important that Parliament take independent and expert advice.

"The ACT Caucus has accepted Dr Michael Cullen's invitation to brief Caucus later this week. We will be questioning the Minister on the details of his scheme. We will also be interested to learn how flexible the Government is as ACT has some ideas on how to improve the scheme and we will be proposing these to the Government,” said Rodney Hide.

ENDS

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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