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Speech to Grey Power Association

Posted on 26 Aug 2005

Speech by Chris Brown, ACT Candidate for Rodney Electorate, to Grey Power Association, St John's Church, 180 Centreway Road Orewa.

I got involved with ACT as I could see that the family, a concept that has served mankind for thousands of years, is being destroyed. Today in many countries, which have little if any form of state support, families look after themselves, taking care of each other.

ACT's philosophy is founded on the three core principles of personal responsibility, choice, and freedom.

ACT offers a real alternative to the current government philosophy.

When it comes to superannuation, politicians have an appalling track record.

My parents' generation believed that paying their taxes throughout their working life was contributing towards their pension. That belief was wrong. The people who are working today are the ones paying for your superannuation.

Today, there are 5 full-time workers for each retiree.

Without a real commitment to improving our economic growth and fundamentally changing the way we fund pensions, our situation will approach a crisis within the next two decades.

As a result of longer life expectancies, better healthcare and a falling birth rate, the number of retirees is expected to more than double from 450,000 today to 1.1 million people or 25% of the population by 2040.

The workforce is projected to grow by only 10 percent.

That would mean that the government of the day, with only 2 people in the workforce to tax to fund each retired person, would be forced to cut the pension rate and lift the age of entitlement ... that is, unless we look at alternative ways to fund superannuation.

That means the cost of providing for super at the present rate is going to more than double. Providing for the pension now costs 4% of everything we produce.  That is the net cost.  That cost is projected to rise to 9% by 2050.

To cater for it with the current approach would require increase income tax increasing by 25%. That's the maths of the number of elderly more than doubling.

It doesn't matter what politicians promise: they can't beat the maths.

ACT supports the continuation of national superannuation.

The best policy for caring for our elderly is strong and consistent growth.  The more prosperous we are as a nation, the better we will be able to look after our elderly and indeed every New Zealander.

Averaging five percent growth a year instead of two would make New Zealand four times richer in 50 years. And we would be able to look after the growing number of retired.

That is why it is essential that we seriously consider the introduction of personalised superannuation savings accounts – based on the experiences of the Singaporean scheme, of that introduced in Chile, Hong Kong and a growing number of other countries – to avert the future funding crisis that our present pension scheme faces.

The "Cullen fund" gives a false sense of security and only smoothes the costs a little.

Instead of the cost of super going from 4% to 9% of GDP the Fund bumps it up to 6% now to knock it down to 8% in the future. It will suck up 2% of GDP and does nothing to address the real problem: the need for strong, consistent growth.

The taxpayer always pays for the pension.

ACT believes the best tax incentive that we can give to people saving is to lower taxes. The more money that working people have in their pockets the more ability they have to save, especially if work place savings schemes are affordable for employers.

We won't get rich or secure our pensions by having government take even more money off us.  The way to prosperity is to have a fairer and less economically damaging tax system.

ACT will restore the standard of New Zealand's health care system

In order to do that we will abandon the current government's ideological hostility to private medicine and break down the artificial barrier between private and public.

There is no reason why private hospitals cannot be used to reduce waiting lists.

ACT's tax policy means more people can afford private treatment and health insurance.

A few years ago an independent review was carried out into the cost of running a rest home. The rest homes now receive only 80% of that cost, they are on a fixed income with rising costs. They are loosing money.

Is it any wonder then that the Salvation Army, put all of its residential aged care centres on the market?

ACT opposed the total removal of asset testing in parliament for one very simple reason – the country cannot afford it!

Asset Testing is not about health, it's about Inheritance.

It is understandable that people who have worked hard all their lives to build up assets, would want to be able to leave some sort of inheritance for their families. The idea that the family inheritance could be whittled away in order to fund a lengthy stay in a rest home does not sit well with people.

ACT believes it is not fair to ask current working taxpayers to fully subsidise the inheritance of others whose parents go into geriatric care. People should be allowed to keep a reasonable amount in their bank accounts to cover their additional living expenses comfortably.

ACT has not set a predetermined level for the threshold, or the commencement age, and would review this for greater fairness.

Better decisions are made every day around the kitchen table about what to do with $100 than are made around cabinet tables about what to do with a $1,000,000.

Use your party vote for a party that gives you the truth and that trusts you to make sensible decisions about what to do with your money.

Use your party vote for ACT.