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Funding the aging population.

14 April 1997

Mr Paul Avery
Clerk of the Committee
Electoral Law Select Committee
Bowen House
Parliament Buildings

Dear Mr Avery,

The Centre would like to submit to the Committee, that any wording of the referendum on compulsory superannuation, or any wording in subsidiary information, which did not reflect the principles of democracy on which New Zealand society is based, is contrary to the humanistically determined nature of politics in a free society.

The Centre therefore submits that any wording which suggests a greater knowledge of the facts of superannuation, or a greater knowledge of the facts of political or economic matters on the part of the Government, is contrary to the right to self determination of the people of New Zealand. By extrapolation therefore, it is further submitted that such, or similar, wording as " . . . to help you save for your retirement" is an intrusion into the cognitive processes of free citizens by their elected representatives.

It is the view of the Centre that the role of elected representatives of any group of individual human beings in the case of decision making by general vote, be it the Committee of the local rugby club or the Government of New Zealand, is to present the facts without bias.

With regard to the funding of the "ageing population", the Centre submits that the funding of a democratic society, including an ageing population, is a function of the disposal of the wealth available to that society, regardless of who generates that wealth.

To illustrate this principle consider the two cases which follow. A family consists of a male electrician, married with three children and who earns an annual salary of some $33,000 - slightly above the average of some $31,000. That family, group, population or "society" has therefore an annual income of some $33,000 with which to meet the costs of their family or "society"

In the second example consider the well reported cases of Chief Executive Officers of some organisations in this country who have an annual income of some $1,000,000 annually. If such a CEO was also a married male with three children, then this second family, group, population or "society" would have an annual income of some $1,000,000 to meet the costs of their family or society.

It can be seen that in each case the society has a population of five and also in each case twenty percent of the population is supporting the remaining eighty per cent. In terms of the wealth available to each society it will be noticed that the wealth of the society is not a function of the size of the population, or of the proportion of generators of wealth to consumers of wealth. The society funded by the CEO has thirty times the wealth available to it than does the society funded by the electrician. It is submitted therefore that the wealth available to each society is a function only of the ability of wealth creators to create it. The Centre understands the annual income currently available to the people of this country for disposal, in the form of taxation, is some thirt five billion dollars.

In view of the preceding argument it is submitted that the annual income of a society available for disposal, is a function of the emotional desires of those human beings who want or a forced to make money and who pay taxes on that money. It is also submitted that it is those same human beings who employ other human beings who in turn pay their taxes.

It is therefore the view of the Centre that all wealth in all societies is created by the business sector.

However, it is also the view of the Centre that in a democracy the disposal of wealth generated by the business sector, is a function of political ideology decided by individual citizens via the ballot box.

By extrapolation, as long as New Zealand remains a democracy and social policy is therefore decided through the ballot box, a future political party may well stand in a general election on the basis of using the wealth generated by the business sector to fund its social policy targets which may well include funding the so called "ageing population".

With the greatest respect it is submitted that such a course of action is for the people to decide on the basis of the facts presented to them and not by the use of apparently misleading terminology such as " . . . helping you to save for your retirement"

This leaves open the question of whether or not the future drain on the annual income of this country by the existing superannuation scheme can be met by he annual income generated by the business sector. Research carried out for the retirement commissioner suggests that it can.

The Otago Daily Times (23.12.96) carried a report which said in part:

"Research for the Retirement Commissioner, undertaken by the NZ Institute for Economic Research, indicates that as long as debt continues to be repaid and the economy remains on track, then state funded superannuation should be easily affordable."

In a further Otago Daily Times report (27.4.96), economist Len Baylis is reported as saying on the subject of superannuation:

"In 1966 about 38% of the population supported the rest. Today the figure was about 45% and expected to rise.

"Mr Baylis said while the number of people receiving superannuation would go up, the number of dependant people would also drop."

On the subject of saving for one's retirement, in the same article Mr Baylis is quoted as saying:

"Statistics showed there was about $90 billion invested in financial assets but $300 billion was  invested in real assets such as houses."

In view of the arguments as set out above, the Centre would like to submit that the wording of either a referendum document, or that of an information campaign; in a democracy, must reflect the right of the citizens of that democracy to make their decision on the basis of full and frank disclosure of accurate information. It is further submitted that the citizens of a free, democratic society also have the right to not have their world view distorted by the use of the power available to their elected representatives - but which is not available to them.

Yours faithfully,



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