Duncan Garner: Our economy is broken, so why give millionaires taxpayer-funded pensions?

Our economy took the biggest hit in GDP in the developed world in 2024, according to HSBC bank, and although those in the know say things are getting better, it’s hard to see any sign of it.

Budget deficits appear to be locked in, we’re spending more than we earn and unemployment, at 5.1% in the December quarter, is at its highest level since the September 2020 quarter. A percentage figure hides the fact that we’re talking about 156,000 people, many of whom will have stories about the havoc losing their jobs has wrought on their lives.

These figures don’t take into account thousands of other workers who say they’re under-employed and want more hours and are struggling to make ends meet.

Our welfare system - the ambulance at the bottom of the cliff - is being overwhelmed. There are those who will say that’s because we offer a smorgasbord of benefits and assistance, but those dining at the table of that taxpayer-funded help really don’t have a lot of choice right now.

We simply can’t afford it – just as we can’t afford a First World health or education system, it seems. Nor can we allow it to carry on and watch the costs – we currently spend $40.3 billion a year on benefits including the state pension – rise and rise.

It’s far cry from 2014, when the same bank’s chief economist declared New Zealand a “rock-star economy”. Now it’s more like the rocker has lost its voice and the backing band has left the stage. We’ve endured the longest economic downturn, outside the pandemic, since 1991.

In the absence of, say, striking oil in Taranaki or a new Coromandel goldrush, it’s time for a mature and reasoned discussion about the future of our welfare system, starting with that most sacred of all benefits, superannuation. It’s the single biggest welfare spend every year, more than all other benefits combined.

The government spent $21.57 billion on New Zealand Superannuation in the year ending June 30, 2024. It’s not means tested, asset or income tested, and more than 900,000 people aged 65 and over get it. They’re our largest, by age, population cohort – Baby Boomers who predominantly own their homes (if not other properties as well), who tend to be debt free, and the wealthier ones are more likely to have other investments such as shares.

It means one of our wealthiest groups of people get the largest welfare benefit of anyone in this country. With a rapidly ageing population that is living longer, how much longer can we ignore this? Especially as we’ll continue to see more retirees and fewer workers – the latter being those whose taxes will prop-up the pension.