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Speaker 1: You're listening to a podcast from News Talks be follow

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Speaker 1: this and our wide range of podcasts now on iHeartRadio.

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Speaker 2: For a good afternoons you So, Treasury has warned about

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Speaker 2: our staggering future debt crisis unless we act and do

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Speaker 2: something about the pension age that they've suggested are raising

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Speaker 2: it to seventy two over the next forty years. To

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Speaker 2: discuss this, we're joined by Infometric CEO and chief economist

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Speaker 2: Brad Olsen Get a bread, good afternoon.

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Speaker 3: Why does the government tax key we save a contributions?

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Speaker 4: Well, because we tax broadly everything to the degree we can,

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Speaker 4: and that keeps all of the various incomes in a

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Speaker 4: more sort of I guess, same same manner. Otherwise you'd

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Speaker 4: have if you didn't tax, for example, your key WE

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Speaker 4: Saver contributions, and everyone would put more of their money

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Speaker 4: in there, and then when they needed it, you'd have

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Speaker 4: a whole lot of people and trying to get their

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Speaker 4: money out for hardship and similar So that the better

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Speaker 4: idea rather than having people warp in and sort of

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Speaker 4: switch around where they put their money is to sort

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Speaker 4: of broadly where you can tax everything similarly. Then you

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Speaker 4: don't have those distortions.

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Speaker 3: Isn't saving a problem for us? Don't we have a

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Speaker 3: large amount of debt, and why we have keisavers because

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Speaker 3: we more need more to move more of our economy

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Speaker 3: into saving. So wouldn't that be a good thing to incentivize.

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Speaker 4: Yes, and broadly we do to a degree because most

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Speaker 4: of your key we savers are known as pie funds,

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Speaker 4: which means they get text at a lower rate than

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Speaker 4: what you'd otherwise see if it wasn't in that system.

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Speaker 4: So you do have something. But let's be clear, even

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Speaker 4: if you made some of those various tweaks that are

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Speaker 4: sometimes suggested to Keiwi Saver, which to be fair, experts

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Speaker 4: generally say, don't mess with key we saver too much

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Speaker 4: because the more you change it, the harder it is

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Speaker 4: for everyone to get their heads around. But even if

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Speaker 4: you did, Truasuries made it quite clear that without some

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Speaker 4: pretty substantial changes to SUPER as it currently is, you'd

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Speaker 4: be seeing the likes of per person payments for health

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Speaker 4: and New Zealand Super that would double over the next

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Speaker 4: sort of thirty forty years. It's pretty significant shock no

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Speaker 4: matter what way you try and do the tinkering at

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Speaker 4: the edges.

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Speaker 2: So the key we save a question. I mean, is

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Speaker 2: that really stickly one of the key ways we can

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Speaker 2: get out of the situation we're facing. Brand A lot

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Speaker 2: of comparison has made with what they do in Aussie

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Speaker 2: and it's quite a generous super scheme that they've got

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Speaker 2: in place. Is that where we need to move to?

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Speaker 4: I think it's part of the solution. And you've certainly

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Speaker 4: seen a lot more political commentary and actually political will

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Speaker 4: come out around you know, trying to beef up key

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Speaker 4: we Saver in similar over time. But again you're sort

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Speaker 4: of only changing around where that money comes from to

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Speaker 4: a degree. So yes, it's part of it. But I

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Speaker 4: put it this way, if we were to say, look,

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Speaker 4: we can solve it all by making some changes to

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Speaker 4: Kei we Saver, but not making any changes elsewhere, By

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Speaker 4: not making any shifts around New Zealand Super, you'd actually

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Speaker 4: get to the point where, over time you'd have people

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Speaker 4: that would have quite substantial private savings. That would be

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Speaker 4: the good thing, but the government would also still be

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Speaker 4: required to pay out quite a significant amount unless you

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Speaker 4: change SUPER at the same time. So you do have

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Speaker 4: to do both.

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Speaker 3: So is there another option rather than retireing you know,

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Speaker 3: raising retirement age people work until they're seventy two, or

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Speaker 3: taxing the Bejesus out of people that you're already taxed

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Speaker 3: to death, or cutting health and welfare. I mean, is

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Speaker 3: there another option, because it seems like every every problem

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Speaker 3: we have, we go, oh, well, let's tax people more.

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Speaker 4: There are a few different options. I mean, Treasury put

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Speaker 4: on the table that if you did nothing else, then

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Speaker 4: you'd have to pay for everything, increase GST to like

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Speaker 4: thirty two percent by twenty sixty five, and I think

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Speaker 4: that'd be pretty unpalatable. I do think that conversations around

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Speaker 4: the age vligibility you have to come through, not because

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Speaker 4: I think everyone should definitely work longer, but more because

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Speaker 4: the social contract that we've all sort of almost signed

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Speaker 4: up to, if you go back in the day, that

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Speaker 4: we've currently got with it. But we raised it because

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Speaker 4: over time people were living longer and therefore spending more

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Speaker 4: of their life on New Zealand super and we've seen

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Speaker 4: that over time as well, and so again, you know,

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Speaker 4: looking at where the life expectancy numbers for New Zealanders

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Speaker 4: have gone, I think there is a reasonable case to

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Speaker 4: lift it a little bit. But here's probably the big

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Speaker 4: one in my mind. At the moment, we've got this

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Speaker 4: odd inconsistency where we increase the rate of New Zealand

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Speaker 4: Super payments by wage inflation every year, but we increase

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Speaker 4: the rate of other benefits, jobs seeking, everything else by

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Speaker 4: the rate of inflation. Now, if you brought New Zealand

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Speaker 4: Super back in line with inflation, which means that supernuitance

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Speaker 4: would still be able to buy the same basket of

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Speaker 4: goods year after year, they'd be inflation adjusted and inflation protected,

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Speaker 4: that would go a long way to ensuring that New

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Speaker 4: Zealand would sustainable over time.

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Speaker 3: Now, what about the complexity of people doing different types

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Speaker 3: of work. So whilst you know people are living longer,

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Speaker 3: people that do more physical work, as has been well discussed,

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Speaker 3: break down a lot quicker. And it's very easy for us,

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Speaker 3: people like us, like people like yourself that work in

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Speaker 3: numbers and Tyler and I who sit on our fat

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Speaker 3: asses talking into microphones, to say that we could raise

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Speaker 3: the retirement age. But when we had a caller before

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Speaker 3: from a guy's head, he's labor, he's had two hit replacements,

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Speaker 3: three shoulder replacements. He's basically more machine than man. How

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Speaker 3: would you differentiate that well.

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Speaker 4: I think we've got to look at the current system

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Speaker 4: where we also still don't differentiate. You can't tell me

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Speaker 4: that a builder is absolutely fine at sixty four and

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Speaker 4: at sixty five they kill over My father's in that category,

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Speaker 4: and I can tell you now that the man's getting

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Speaker 4: worn down over time. But if we're going to have

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Speaker 4: to draw some arbitrary line, then you draw it for everyone.

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Speaker 4: Otherwise it's not going to be universal super. And look,

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Speaker 4: as an economist, I'm totally open to a conversation of

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Speaker 4: it not being universal super, but I'm going to bet

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Speaker 4: my bottom dollar that your listeners will be saying, well,

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Speaker 4: hold on, it's got to be universal, which means you've

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Speaker 4: got to put the cut line somewhere. And importantly, again,

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Speaker 4: we have done this before. If you go back into

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Speaker 4: the nineteen nineties, Previously New Zealand Super was at sixty

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Speaker 4: so I'm pretty sure we would have had the same argument. Then.

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Speaker 4: Now what you would rather do, in my mind, has

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Speaker 4: had some sort of transitionary cover, so that though who

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Speaker 4: are clearly a bit stuffed by that age, have a

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Speaker 4: bit more support, but we can make some bigger changes.

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Speaker 2: Yeah, Brad, really great to get you on. Thank you

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Speaker 2: so much for your expertise that is. Brad Olson, CEO

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Speaker 2: of Inframetrics.

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