Budget - unemployment/retirement
Going through the Budget tables from Treasury this is the most important set of figures I've come across so far:
Unemployment benefit numbers:
2008: 37,000 (actual)
2009: 47,000 forecasts
Unemployed doubling in two years. That's nasty stuff. It is off the back of historically low rates and is still lower than most countries, but that is cold comfort - nasty. 40,000 people in the next year losing their jobs and not being able to be hired...
...for years, possibly.
Social and personal costs aside, benefit payments aside, this is a real indicator of the economic stress to come. Five years back - to be fair - there were 104,000 unemployed so the forecasts are not catastrophic; but that in turn raises suspicion that the forecasting is overly optimistic. My co-blogger has made this point several times.
It would not surprise me to discover that Treasury's published forecasts (esp. on things they cannot have much affect on) are tailored so they do not scare people, esp. those with capital who will react to the information. The risk is that by presenting a pessimistic outlook they will set the circumstances to provoke it. It's an understandable dilemma.
The other real problem - a structural and unavoidable one - is the post-war retirement wave that will leave a larger and larger share of the population as pensioners - drawing rather than contributing to Crown revenue, and reducing economic activity.
Sir Roger Douglas originally tackled this the first time he was in government in the mid 1970s which Muldoon then scrapped before the repeal law was even passed. In the 80s the age was put back to 65 and there was the surcharge to attempt to make the pension means tested and in the early 90s when the wave was closer - and Douglas was Act - he came up with a modified form of the contributory super scheme. Then in the mid 90s Winston Peters came up with another form of contributory super scheme that was soundly rejected in a referendum, although the surcharge was dumped. And now, with that long-heralded wave of retirements upon us and every attempt at getting a contributory scheme meeting with political and electoral disaster we have to rely on the Cullen fund and tax take to sustain it all. At least Kiwisaver was started by Labour - twenty years too late, but better than never.
We had many opportunities over the years to do something about it - from different people and parties - and each time we said... nah, fuck it, she'll be right. We have had more than a generation to prepare for this. The budget says it's all fine - nothing will change. I mean that English is acting as though nothing can be done about it beyond putting the difficult decisions about a funding crunch off for a couple of years. After reading more of Treasury's forecasts the situation is so bad you would think the only option would be a change. If it's not already apparent - this isn't an ideas-rich environment. This is conservative National, carefully plodding through the minefield of sectors, interests, blocs and other obstacles to change to deliver what Cullen aspired to achieve - a boring budget. Boring doesn't rack up enemies. Boring is a victory.
They itched their traditional scratches like labour laws and alike in urgency but they are small beer in fiscal terms to the Finance Minister. English and Birch only just managed to balance the books (in the after-wash of the Asian crisis) in their last budget in 1999, so if cut backs are necessary they will probably have to come in the next budget when they have a better idea about what to slash and how to do it, leaving 2011 with some headroom for an election budget of rich, creamy Tory love for the middle class mortgage belt.
The long-term political bilateral understanding, and policy consensus for the future of New Zealand seems to be that the government will pump in as many immigrants as it takes to generate enough tax revenue to pay for the super. But they think the only way they can attract enough immigrants is to also let in the working age immigrants' elderly parents... who can draw the super...
You may get New Zealand Superannuation if you:
are aged 65 or over
are a New Zealand citizen or permanent resident
normally live in New Zealand at the time you apply.
You must also have lived in New Zealand for at least 10 years since you turned 20. Five of those years must be since you turned 50.
Anyone see a problem here?
2008: 508,000 (actual)
2009: 522,000 forecasts
Is this sustainable?