Government has more money to spend from stronger-than-expected growth

Finance Minister Grant Robertson delivers his first budget to Parliament.

Brent Edwards discusses Grant Robertson's first budget.

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The government will spend an extra $2.8 billion this year as stronger-than-expected economic growth has given it more money to play with.

Most of the new operational spending will be soaked up by health, education and housing. As well, the 2018 budget has allocated an extra $3.8b in capital spending, much of it again to help build hospitals, schools and houses.

Finance Minister Grant Robertson says over the next four years the coalition government will spend $24b more than the previous National-led government had planned to spend on infrastructure and social services.

“Our priorities are different from the previous government. We are determined to turn the page on the ideology of individualism and a hands-off approach to our economy that has left too many people behind,” Mr Robertson says.

But while the government is spending substantially more, he says it is also adhering to its budget responsibility rules and living within its means. Government spending will remain below 30% of GDP and net core Crown debt is forecast to fall to 19.1% of GDP by 2021-22.

As well, the Treasury is forecasting a budget surplus of $3.1b in the financial year ending June 30, $3.7b next year and rising to an estimated $7.3b by 2022. That is based on forecasts of economic growth of 3% a year over the next four years. Wages are expected to rise 3.1% a year while unemployment should fall to 4.1% in late 2019.

Health gets biggest share
Health will get $3.2b of new money over the next four years to cover its operating costs, with district health boards getting $2.3b of that. The budget also sets aside $750 million for new capital spending, with Mr Robertson describing it as the biggest commitment to rebuilding health infrastructure in a decade.

While the government is not going to immediately meet Labour’s commitment to cut the costs of visits to GPs for everyone it will make GP visits free for everyone under the age of 14 and the cost of doctors’ visits for people holding community services cards will drop by $20-30 a week.

Elective surgery will get an extra $126m to help cut waiting times while $103.6m will be invested in midwifery services over the next four years. Under that funding there will be an 8.9% rise for community midwives to bring them into line with hospital midwives.

The budget also includes $67m to extend the national bowel screening programme and $83m to support air ambulance services.

Education also gets a boost
New operating spending for education totals $1.6b over the next four years, with early childhood education getting a $590m boost. Schools will get an extra $203.6m in operating funding to help meet rising costs and to cope with the growing number of students. As well, the budget provides for the employment of an extra 1500 teachers in the country’s primary and secondary schools over the next four years.

The budget sets aside another $395.8m to rebuild schools and provide more classrooms. The Christchurch schools rebuild programme will get $62m of this money.

The government has come under pressure over the support provided for children requiring extra learning support. In response, learning support funding will rise by $272.8m over the next four years, with teacher aide funding being boosted by $59.3m.

The housing crisis
The government intends to provide another 6000 homes for people with housing difficulties, most of them new state houses, over the next four years. The budget provides $234.4m of new money for both Housing New Zealand and community housing providers.

Overall, it commits another $1b in new spending on top of the $2.1b allocated in the December mini-budget for the KiwiBuild programme to build 100,000 affordable homes over the next 10 years.

Dealing with poverty
It says the housing spend-up, as well as the families package announced in December, will help lift children out of poverty. Oranga Tamariki, the Ministry for Children, will also get an extra $269.9m over four years to ensure more children and young people can get the care they need.

What about business?
As earlier announced the research and development tax incentive is funded in this budget with $1b set aside over the next four years. It is still unclear whether research and development grants will be scrapped once the incentive is in place.

The budget also confirms the $1b a year for the Provincial Growth Fund, which Mr Robertson says represents the biggest investment in the regions in his lifetime. This year the fund will include $684.2m of operating funding and $315.8m of capital spending.

As well, $100m is set aside to set up the Green Investment Fund to help kickstart investment in new environmentally friendly initiatives.

The government also believes its increase in funding for the Ministry of Foreign Affairs and Trade will help secure better access to overseas markets for New Zealand exporters.

Helping farmers
As dairy farmers face the risk posed by the cow disease mycoplasma bovis the Ministry for Primary Industries gets an extra $38m over four years to keep the country safe from pests and disease. Biosecurity also gets another $9.3m.

It does not appear a great amount when Agriculture Minister Damien O’Connor warns mycoplasma bovis could eventually cost the country $1b.

Mr Robertson says more spending to counter the cow disease is inevitable but the government is yet to receive a final report from officials on just what it will take to respond to the disease.

Funding security
Both the police and Defence Force do well out of the budget. The police get an extra $298.8m over the next four years to meet the coalition government’s commitment to hire another 1800 police officers.

The budget is also spending money on building new modular units to house another 600 prisoners but the government still has the goal of trying to reduce the prison population.

The country’s armed services will get another $345m over four years to enable them to contribute to peacekeeping and be able to better respond to natural disasters. In partnership with the Ministry of Social Development some of the money will also go toward expanding the Limited Service Volunteer programme for young people under 25.

It's all about well-being
Grant Robertson says this will be the last budget presented in this way.

“Next year we will be the first nation in the world to deliver a Wellbeing Budget reporting our annual progress against a range of measures that highlight the health and wellbeing of our people, our environment and our communities. We will use the living standards framework developed by the New Zealand Treasury to help develop our budget and to measure our success.”


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68 Comments & Questions

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Nothing wrong with this budget

The country still stays below 30% of GDP and Crown debt to fall even further.
Time to grow up and get behind the government and stop whining

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Don’t forget National left behind the surplus for this accidental Labour govt to go on a spending spree

(Edited)

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Its also grown since old boy

And don't forget Cullen left National a huge surplus and less debt than Labour just inherited - many of you are being frugal with the facts

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he also left them with a RECESSION old boy

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Nonsense

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This just in, NZ's right says Cullen caused the Global Financial Crisis. This is as laughable as Simon No-Bridges pretending National's concerned about mental health funding (which admittedly, from your comment, he should be).

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I seem to remember Cullen laughing as he explained how he spent the last few bucks buying a useless train set.

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Anyone who paid attention in those last Labour months was appalled when he announced this - we all remember it well. The cupboard was bare. Labour under Clark and Cullen knew they would lose so wilfully wasted as much as they could before the election.

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National did not leave a budget surplus behind but a spending deficit. It is not a surplus in its correct sense when you choke social services for much needed funding to show your fake political might. Thanks to the Key-English govt., Labour is now left to play catch up for 9 years of underinvestment in the people of NZ.

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Hey look it's a Labour supporter. I thought they had all gone into hiding from embarrassment, judging by the way they've all been so quiet of late.

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BUT. The Government has been telling us for weeks that National left the country in a mess. ALL of the extra spending that they are able to announce is a direct result of the economy they inherited. You can't have it both ways, either a mess and we have to tighten our belts or was pretty good and we can go on a spending spree.

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You have to be pretty obtuse not to acknowledge that the previous government left the health system in a mess.

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There's plenty of cash, the economy is doing well, blah blah blah. You have to be pretty heartless, middle class, and neoliberal to measure a countries success on GDP and economic growth alone. National did leave a mess, neglecting the social sector for 9 years. You must have your head in the sand if you think our health, education, and housing have been doing well the last few years. It's not all about money..Or is it for you?.

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Ms Joanna Taylor is correct. The economy is doing well as a result of National Government policies. You say "It's not all about money" Well you try fixing hospitals, schools et al with out it. And when the tax/compliance burden becomes too great, our funding source will, has to, crumble.

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John you seem to have had an autocorrect faux pas. Housing is spelt "h-o-u-s-i-n-g" not "e-c-o-n-o-m-y".

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OH! So you too believe it is the Governments responsibility to supply you a house at your price?

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Yeah but you will only qualify for one if you have half a dozen kids that you can't support on your own.

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And living in a car having being booted out of a very good house coz you contaminated with Meth.

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Meanwhile, old rich folk get a benefit just for being over 65, regardless of need. Over 60% of the social welfare budget. Bludgers.

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Oh? so you would like to see Ruth Richardson back?
you should try following that pension money and discover how many private businesses profit and pay taxes with it. Then you should ponder the fact it was a Labour gov. who, (a way back when) told New Zealanders "pay extra tax and we will look after your retirement"
And New Zealanders did pay extra tax.,

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Wrong Bob, they were the ones who did the hard graft and contributed. Ring any bells....

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Alas most if not the regular commentators on here have private health insurance and send little Tarquin or Matilda to private schools so they don't care a jot about those public sectors as funding deficits don't affect them. All they care about is having their tax cut which is something most Kiwis rejected in a recent poll.

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Arrogant drivel. The contributors here with a grip on reality are the ones who got off their backsides and made their way in the world. They didn't go looking for handouts.

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So very true!

Simple analysis of the debt to GDP figures from the budget:
Labour are going to borrow more (by their own statements) and take us further into debt, all while slowing the rate of debt repayment, a problem that they may not have to deal with if they get voted out of power.

Labour is relying on the same rate of growth of the economy, while making bugger all movement on the debt, and so the debt to GDP % will automatically fall.

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Amy Adams got shown up pre and post budget as the complete lightweight she is
She is hopeless and put of her depth. Grant Robertson has no opposition in the finance role

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Grant Robertson cannot read a graph. The annual rate of GDP increase or inflating has been dropping, so the % growth is falling. i.e. Our economy is doing worse than expected in comparison withe last few years.

You could come to the conclusion that it was better if you compared it only with the GDP annual rate of increase when Labour was voted out in 2008. At which point we were in a GDP negative growth period. Grant Robertson is planning based on hope, not reality.

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Should be given back to the tax payers. Also the DHBs need a massive overhaul, giving them more money won't make much significant changes.

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Yes the health sector does seem to be a bottomless pit where no matter how much money is sunk into it, it never seems to make any difference one way or the other.

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Walk into any mall food hall and you can see why the health budget is and will continue to be a bottomless pit

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Maybe some of those junk food suppliers should have to pay some money straight into the health budget? The cigarette companies have been getting massively taxed for years. Time for the junk food industry to face the same thing.

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taxing junk food suppliers doesn't improve the outcome, when the base cause is an enlarging population with a exponentially diminishing level of intellect...

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Excuse me Mr Ivan, may I interrupt? I can assure you, that it is not "the tobacco companies" paying all that tax. Rather it is the smokers that pay it, Thank you, please continue.

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Nice work.

Good budget well thought out and helping those who need the help.

Fat cats will be getting thin.-

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When the 'fat cats' get thin, the jobs and businesses go, and more people miss out. But hey, envy instead of intelligence is alive and well in the current coalition of wasters.

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Title is more spin. This Labour-WinstonFirst Government will be expropriating $24 billion more out of the NZ economy (kiwis wallets) over the next 4 years to spend on their pet projects. The government didn't just magically "have more money to spend", governments take money away from their citizens, it's not zero sum, it comes at a cost and the more wasteful the spending the bigger the economic costs, for everybody.

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The economy is whittling along quite nicely at the moment so this is the time in the cycle to be paying down debt, and doing it quickly. It is good to see that the Government is still forecasting a surplus but I do worry that additional spending will put further heat into the economy; heat with the Reserve Bank will need to take out through interest rate rises.

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This will be 2008 all over again. As most of this extra tax comes from housing and consumer spending that is financed from overseas debt. When the banks turn off that funding, which they are already starting to do. That consumer spending and the tax income will both disappear.

You will have higher unemployment due to the construction industry shrinking. At the same time as higher petrol prices, and in turn things like higher food prices due to the min wage increase and fuel cost increases. Rents will keep rising as the kiwibuild houses will only replace houses that would have been built anyway.

Instant recession. And the rest of the world will laugh at us. For creating our own recession.

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And Labour will get voted out leaving the next incoming government to clean up the mess.

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Sad but true. Hope its not too late by then.

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Funny, because for nigh on a decade we have seen the RBNZ and other central banks set interest rates at historic lows and constantly complain because there is barely any inflation at all! If anything it should return to more "normal" rates around 3%, and we have a helluva long way to go before we see the historical norm for the OCR of around 5%.

I wouldn't be worrying about public debt, so much as private. I look forward to real wage growth above CPI - the consumer needs to start paying down their own debt with a nosebleed 168% of income to household level compared to government debt hovering in the low 20%s of total GDP, which is one of the lowest in the OECD. The government is the conservative one here, not the private citizen!

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Keynesian economics says spend in recessions and save when the economy is doing well. Unfortunately most governments worldwide appear to have forgotten the latter part and don't roll back their spending when times are good (indeed this is why Keynes himself came around to a better idea being to raise payroll and income taxes when the economy is doing well, and to reduce them in recessions). The NZ Government (of both Labour/Green/NZ First and National ilks) should be praised for doing the right thing and paying down debt.

Yes, personal debt is too high - and especially so as so much of it is ultimately held overseas; however this is a reason to reduce taxes (possibly by way of a debt reduction incentive) rather than raising them to increase spending.

If it were me at this stage of the cycle then I would probably not be spending so much on infrastructure; but I would be putting infrastructure spending plans into place so that they could roll out when the economy needed a bump start. I would also be reducing restrictions on house building and land use.

But, all in all, the budget is reasonably conservative, there is nothing too worrying in there; and I think that the Government deserves some praise for not going wild with our money.

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Money reaches its lowest common denominator when someone(Labour) is spending someone else’s money ( the taxpayer) on someone else’s theory( the Unions and the Greens

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Why do we need thousands more cops, when there's already thousands of them out there already. They're everywhere, just waiting for ya with their ticketing books at the ready.

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Totally true; I'll believe that we have a police number crisis just as soon as I no longer see police cars parked up on safe, straight sections of motorways and highways in order to revenue raise off the people who are trying to overtake cars that refuse to pull over on the curvy parts of the roads.

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Maybe the new cops will all have quotas so the Robertson can fill the coffers with speeding fines to pay for more cycle lanes, and of course the NZ First slush fund bribes. So while Winston figures out ways to squander the slush fund, Christchurch residents can look forward to more years of broken infrastructure and roads.

So Winston is drinking brandy or whiskey at party functions Christchurch has to endure heavily chlorinated drinking water.

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Gee that $11.5 billion hole is getting pretty embarrassing... Can everyone get on board now and make NZ a better place please?

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After watching the budget this afternoon, my abiding thought is that as a nation we have to stand for more than just handing out more and more welfare to brown faces and their endlessly outstretched hands. If as a country we are to have a future of wealth and prosperity, of choice and possibility, if we are to be an aspirational country then we have to amount to more than just welfare and more welfare, and tax and tax and tax. That is no future. That is not reaching for the stars, for a future of hope and possibility, for a nation that genuinely punches above its weight in the economic stakes with all the benefits and advantages that that brings to its people. No, that is the pathway to stagnation. The world will not sit by and wait for us to catch up. It will plow on ahead regardless. And we will be left even further behind.

Already we cannot afford the latest cancer treatments and New Zealanders die early as a consequence. We do not pull our weight in defence and military spending, in spite of the ever pressing threats that a changing world presents to us here in the South Pacific. We do not have the infrastructure of roads, transport, rail that other countries have because we can't afford it. Poor countries in Asia have better roads and transport than we do. Almost a quarter of our NZ born population lives overseas, (how's that for a vote of no confidence?) where they get the chance of better more prosperous lives, greater choice, and possibilities for themselves and their families. Where they get to enjoy the fruits of their labour and to prosper fully from it. The list goes on and on.

This was a terrible budget in its neo-stagnant shortcomings and it's disappointing that so many of our people, even those on the right, simply don't, or don't want to see it. We need a call to action, not a call to more welfare.

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Gee, stop sugar coating your statements and tell us what you really think, Steve!

If you take a look at the budget again, closely, the overwhelming focus was on spending initiatives on health and education, the housing crisis, as well as boosts for the police and military (all points you say we need to fund more in your above comment...). I don't see anything specifically targeted towards "brown faces" with their "outstretched hands"

I'm surprised your comment wasn't at the least edited by NBR, especially that first line. Careful, your racism and blatant political allegaince are hanging out for all to see!

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That's just how you see it. Most will see it as the truth.

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I couldn't agree more, Steve. It's absolutely shameful that this country is pouring $14.5b into the black hole that is non-means tested superannuation.

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Yeah it should change it's name to the handout budget, because that's what it really is.

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You are absolutely right. New Zealanders have given up and are content to freeload off Australian taxpayers, its defence force, and its border security to keep out illegal economic migrants.

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Some of the Labour supporters seem to think money grows on trees. Business is slowing, costs are going up, profitability will reduce, prices for basic essentials will as a result go up to the consumer who will find they are actually worse off, and overall govt tax take will start to drop and then Labour has a problem with its spend policy. Saw nothing in the budget to actually change the culture we have in NZ of drinking, gambling, smoking too much, eating too much junk, which in the end is a large contributor to our health system ever increasing costs and lot of low income earners money woes and resulting crime and domestic violence. We only seem to want to have the ambulance at hand for the end result.

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Robert some of the points you mention that see no funding are of course the habits of some of the Labour voters....

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I suppose that's what you get when you have a whole lot of career politicians in charge, as opposed to a party of business people.

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This last election is a real problem because Labour has blatantly broken promises and there has been no accountability.
This sets us up for a free for all in the future where every politician knows they can just say what they want and there are no repercussions.
In any other sector this would be fraud.
Given Jacinda campaigned on integrity this is outrageous.
Dissolution and snap elections I say. The only fair way forward for democracy in this country.

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Disappointed in the weak National opposition yesterday. Their messaging was all over the place from the government not spending enough to being a tax and spend budget.

They have got some ways to go before you can call them a credible opposition.

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Zimbabwe Leaders have read their Budget, borrowing 17 Billion as people in Otara are still poor as Labour have done nothing for them ! ----Tenants will be kicked out of their rentals and face huge increases thanks to Labours ringfencing policy !

Jacinder smiles as she heads back to her Two Million dollar Mansion in the expensive Mount Albert area.

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It sort of begs the question as to why the people of Otara, and the like still vote for them, and always will.

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Another approach could be to get the voting and drinking age back up to 20 years. Get alcohol out of supermarkets, a ban on smoking, much tougher pokie laws or abolishment and draconian drug enforcement laws.

The continuous handouts are not working and in fact make the situations worse. We almost have to save these people from themselves. There has to be a better way.

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Yep, there isnt more money for housing or looking after the kids better. It will be benefit day, lets go to the pub or casino. I want to hear one lefty just admit that a reasonable chunk of the homeless or claiming hardship are people constantly making bad choices, yet all we want to do is prop them up instead of managing them and creating some accountability on what they are doing with the our hard earned taxes. No problem with giving genuine hard up people a hand up but not the ones that just expect it as a right, China who we have to free trade with doesnt do it.

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It's tiring reading comments from people who refuse to put the component parts of social welfare into perspective. Let me make it clear for you:

Jobseeker Support and Emergency Benefit = $1.7b (6.3%)
New Zealand Superannuation = $14.5b (53.7%)

Doesn't take a genius to figure out which should be cut first.

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What about the other 40% you have left out?

If we cut superannuation, not a silly idea, would you also advocate cutting taxes to the same degree?

Would you start by increasing the retirement age or cutting the amounts paid?

Superannuation does not exist in all countries yet the old still seem to do OK.

Young people starting out today need to learn that by the time they are ready to retire, they will need to live on their own savings and investments.

Are we teaching them the right lessons at an early age if we provide welfare or artificially inflate the minimum wage?

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First step is to means-test superannuation. That'll pare it back to, say, $5b (out fo $15b). Pump $5b into new housing and reduce income tax across all brackets to the tune of $5b. Everyone's (who deserves to be) is a winner.

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The key question is how do we get politicians to act on it? Both Labour and National have resisted making any changes.

Imagine Winston walking into Parliament and stating he is all for superannuation means testing, and to start the ball rolling he has cancelled his superannuation!

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Agree, pretty concerning we give over 60% of our benefit budget to old folks regardless of need. That's a lot of social redistribution to rich folk who don't need it at all. Bad choices indeed.

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Bad choice? Or reward for contributing to the tax take over their lifetime? I have no issue with it -and no I'm not a superannuitant.

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If Labour really wants to help the poor and kids in poverty, then introduce food stamps for the local supermarkets rather than dishing out cash. No booze, smokes, drugs or junk food. Be an honest start to addressing the issues.

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