16 March 2005

An address by Rt Hon Winston Peters to Grey Power Meeting Hapai Club, Fergusson Drive, Upper Hutt, 2pm 16 March 2005

“Social Contracts Must Be Honoured”

Mr President, distinguished guests, ladies and gentlemen. Good afternoon.

Thank you for the invitation to speak here today.

We have been asked to address issues confronting Grey Power members and some of the problems faced by those members in our society who are no longer in the work force and offer some solutions.

What we are talking about is called a social contract.

When most of you left school and went into the workforce there was an unwritten contract between the people and the government of the time, whether it was Labour or National.

In return for social security you paid high taxes.

It was a cradle to the gave system that started with the family benefit and ended with national super.

New Zealand was regarded as a progressive social laboratory.

Governments of both colours set out to improve the lives of people.

As we look back on those days of equality, full employment and some economic justice, we realise that not all change has been for the better.

For example, we used to be safe in our homes.

Elderly women were not attacked by intruders.

People here today can probably remember when we did not lock our doors unless we went away for a long time – and then the neighbour knew where we left the key.

We could safely walk down poorly lit streets at night.

We could get to a doctor or dentist.

We owned our own country.

How times change.

We can’t bring back the past but we can change things for the better rather than for the worse. New Zealand First believes that some changes are essential in policies dealing with those members in our society who are in their sixties and above.

SUPERANNUATION

We outlined to a Grey Power meeting last month in Porirua the injustices in the way that superannuation is now calculated.

Instead of acknowledging these injustices, government ministers have been issuing misleading statements and attempting to recruit organisations such as your own to support their nonsense.

They have tried to twist our words, fudge their figures and string you along.

This is a desperate ploy from a desperate party and it will not work.

Let me tell you what they did not say in their response.

They did not tell you they are saving nearly half a billion dollars a year by distorting and contorting the mechanism used to work out the amount of superannuation you are paid.

They did not tell you that in 1998 the Todd Work Force Report on superannuation recommended changes to how the Net Average Wage was calculated, which the then National government implemented in its April 1999 adjustment.

The result was a dramatic fall in the Net Average Wage level.

This cost superannuitants $21 a week.

You probably remember this because Grey Power was outraged by it.

National then compounded this injustice by lowering the floor for the married rate of superannuation to 60 percent of the Net Average Wage.

In 1999 Labour raised the rate for married couples to 67.4 percent.

But what Labour did not do was to lock this higher rate in to ensure your ongoing protection against this devious mechanism change.

They wanted your votes but they weren’t really committed to your cause.

We know this because within two years Labour allowed the rate of superannuation to fall to 65 percent and below.

The effect of this for superannuitants is dramatic.

All of the initial gains from the 67.4 percent rate are gone and what was a $21 loss in 1998 is now closer to thirty dollars.

In my previous speech we noted the change from Consumer Price Index (CPI) to Net Average Wage as the central aspect of the superannuation mechanism.

We want to touch on this a little more.

Currently, although there is a CPI component in the calculation of superannuation it is already out of date when it is used.

The formulae for calculating superannuation in the April annual adjustment uses the CPI from the previous December. So, in April 2005 the government will use the CPI data from the December 2004 quarter. That is bad enough but what makes it worse is that because it is adjusted annually, by the time of the next adjustment, this CPI data is 15 months out of date. On top of all this (and in many ways because of it) this government has allowed the rate of super to actually fall below 65 percent.

With the CPI rising faster than the NAW in recent years, this keeps the rate of super perpetually at 65 percent or lower. When the superannuation floor was 60 percent the CPI was the important part of the equation because the floor was so low. But with the change to the 65 percent floor, which was entrenched in the 2001 Superannuation Act, the Net Average Wage became the vital part of the equation because this is the guaranteed level which superannuation was never supposed to fall below .

This is why Labour initially raised the rate to 67.4 percent in 2000 and why its subsequent fall to 65 percent and below robs our seniors. Additionally the 'guarantee' that the rate of superannuation for married couples should not fall below 65 percent of the NAW ties the calculation to the disadvantageous mechanism. The solution to all of this is straight forward: The rate of superannuation must never be allowed to fall below 67.4 percent.

If the calculation was applied honestly and without the economic gymnastics that have been applied the 'married rate' would increase by nearly $30 a week! New Zealand First will go further and incrementally increase superannuation to 72.5 percent of the Net Average Wage to ensure the elderly receive a secure and dignified living standard. When addressing superannuation we must also address the rebate for non-qualified spouses, which affects five percent of all superannuitants.

For some strange reason, the government thinks that a person under the age of 65 eats less and costs less than someone over that age. If both of the couple qualify they get $383.22 a week but if one of them is under 65 they get only $365.40 a week. Why is this? The situation gets worse when you consider the rebate that those with a non qualifying spouse are forced to pay.

It is an outrage to think that this government sets the rebate at 30 cents in the dollar for other benefits and yet superannuitants are forced to pay a rebate of 70 cents in the dollar. We will change the rebate for a ‘non-qualified spouse’ receiving superannuation and the 55 plus benefit to bring it into line with the widows and domestic purposes benefit.

There is also the injustice that these couples are classified as one person when it comes to earning. If one spouse earns more than $80 dollars a week, the government starts taking superannuation back whereas all other beneficiaries are EACH allowed to earn $80 before their benefits are affected. New Zealand First is aware of these issues that affect you and pledges that you will not be forgotten later this year.

AGED CARE SECTOR We are also in the midst of a growing crisis within our aged care sector. Not only are those who work within this sector seeing their wages fall way behind those in other areas of the health sector, but we are also seeing this affect the quality of care being provided. This government’s tight-fisted approach to addressing the concerns of our seniors lies at the core of this issue.

Put simply, $88 a day per person is not enough funding to provide care. That is why we are witnessing large numbers of church and charitable organisations leaving this sector because it is not viable for them. This places great strain on those who remain and a huge amount of uncertainty among those people who need this vital care. Again the solution is straight forward.

This sector needs greater targeted resources. In the first instance, the pay for those who provide the care must be addressed. We cannot continue to rely on the goodwill of those working within the care-giving sector to accept substandard pay. New Zealand First will remove income and asset testing for those who require long stay geriatric hospital care and asset testing for those in long stay geriatric private care. We must also consider this sector as a whole and how best we can address at a broad level the difficulties within the aged care sector. A government which New Zealand First is part of will be totally committed to doing just that. Remember, New Zealand has a looming ageing population phenomenon and it is ominous that the infrastructure of elderly care is imploding on the eve of it.

ELECTRICITY AND RATES Now there is also another crisis occurring within our society which affects all New Zealanders, but our seniors more poignantly. It is the rampant energy price rises we are witnessing and soaring local government rates. Power prices have risen dramatically over the past five years – over forty percent in some regions. Local government rates have also risen, on average, by more than 16 percent over the past three years. This is much faster than inflation. These massive price increases for electricity and local government rates means an extra strain on superannuation payments that are already stretched.

For nearly 82,000 New Zealanders superannuation is their sole source of income. And the vast majority of the rest, nearly 407,000, receive less than $20,000 per anum excluding their superannuation. So for most of those receiving superannuation, when the price of power or rates goes up – they really can’t afford to pay more.

The good news is that New Zealand First has a solution. Much of the detail will be unveiled at the Grey Power Annual General Meeting in April, but let me give you a taste of what is to come. First, we think that power companies need regulation and regulators with more teeth to ensure they have to justify their price rises.

Second we think that charging high lines costs for power, whether you use the utility or not is crazy. We think the line charging system must be modified for superannuitants so that they are charged for what they use – not just to have the system connected. In relation to local government rates, we will be proposing a sliding scale of rates reductions. In effect what this will mean is that if superannuation is your sole source of income then you will receive a significant rates rebate and the amount of rebate will decrease in line with additional income you receive. At $60,000 a year the rebate ends. Again more detail will follow in April. CONCLUSION We want to conclude with this thought. There are nearly half a million superannuitants in New Zealand. There are also over four hundred thousand people in the 55 – 65 year age bracket. Combined this is the single largest voting block in the country. We believe the elderly are being ripped off in their declining years.

You should be treated with dignity and respect. You could use your collective votes to make positive change for yourselves. A collective party vote for New Zealand First will see $30 extra in your pockets, the age care sector fixed and polices to address the cost of your power and rates. Remember that – a party vote for New Zealand First will change your lives for the better. That is our commitment and we will honour it.

ENDS

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