I have been asked to comment on sections 3 and 4 of the stability document but as a former 1997 PRG member there are some broader observations about this issue that I would like to make.

To summarise these points

• We must learn from the mistakes of the past
• We must not forever reinvent the wheel - that is of itself destabilising
• We need to be careful of playing political games

Not discounting the momentous events of the last few years, in my view the case for longstanding instability made in this paper has been overstated. Many of the ten changes identified as being the evidence of instability since 1975 were instead logical and necessary adjustments. The original scheme was too generous and paid at too young an age. Reducing the relativity and increasing the age were inevitable consequences. Once the tax scale was flattened, with the top rate falling to 33% from its 1982 level of 66%, the case for the surcharge was strong. It is inevitable that there will be change as time goes on, and we need to work on the process of making these changes make sense; all issues we devoted considerable attention to in the PRG report.

What is stability anyhow? We might use the metaphor of the wobble doll - give it a whack and it will oscillate back and forth but eventually return to original upright position. Most of the major thuds to the NZ superannuation doll have been self-inflicted and have come fundamentally from, dare I say it, nothing more than poor political acumen.

Since 1990 there have been several of these ill-considered, non-consultative, unilateral attacks. The worst assault on the wobble doll came in 1991, when the mother of all budgets tried to make national super into a welfare benefit. But that sharp lunge did not permanently damage or unseat the doll, and while the surcharge was tightened too far when the policy was reversed, those excesses were finally resolved, through admittedly a tortuous Accord process, for the 1997/98 year. In that year the surcharge was virtually returned to its real level of 1991. Yes, the Accord process was tricky, but there was evidence of the process working and delivering stability. With time and leadership this could have been improved.

The referendum on compulsion again was another frontal shove, but in fact reinforced the stability and consensus around the existing arrangements. That high degree of public consensus should have been capitalised on and used to promote consensus around the Accord. It could have been interpreted to mean that New Zealanders were more consensual about the policies embodied by the Accord than they are about just about anything else.

My contention is that the Super 2000 taskforce paper is short on examining the lessons from history. The period of 1993-1996 when the Accord was in place was not Nirvana, but it was the closest thing we have had to a stable and certain policy environment. It was crafted with lot of pain, good will and the unfamiliar relinquishment of political opportunism. What went wrong? I suggest that the paper glosses over the important lessons. With no supporting evidence on page 19 we read that 'the Accord came under considerable strain due to the lack of a strong public consensus on the policies it embodied.' But as evidenced in 1997 an astonishing 91.8% of us did not want a radical change. And, according to the taskforce, 89% of us would like the politicians to agree on long term policy, which is exactly what the Accord delivered.

I would sheet home the culpability for the recent super wobbles to the politicians who have refused to give the issue the leadership it required. For example both National and Labour should have refused to negotiate on matters of superannuation in the coalition talks of 1996. It was the classic prisoner's dilemma, but the party that had the backbone to leave it to the Accord would have won kudos in the eyes of the public. Will we learn from these mistakes?

The abolition of the surcharge in my view was the mightiest, terminal shove to multiparty agreement doll, even if in the end it had the support of all the political parties. The problem is that the surcharge was the glue holding the left and right together. It represented a hard won compromise between universal pensions come what may on the one hand, and a safety net means tested benefit on other. The abolition of the surcharge was nothing more than a pretend agreement which left the pension vulnerable to attack. That vulnerability has already been demonstrated by the reduction of the wage band floor to 60%. In turn this has destroyed any vestiges of security that the public had that there was an Accord process for agreed and measured change. It was driven by no empirical data about living standards, in a vacuum of information about the recalibration of the average wage, and entirely without consultation. This unilateral provocative political act cannot be justified (although the minister for senior citizens recently cited the Asian crisis as the reason) and should receive the highest possible condemnation.

In the December 1997 PRG report we set out clearly a path that could be taken to garner and recover political consensus. In my view these recommendations should have been acted on immediately. The doll needed an urgent panel beating, fresh paint and a lot more sand in its base. But to reconvene the multi-party forum required political leadership as well as supportive public statements from the Office of the Retirement Commissioner about the Accord process. And indeed there were public statements from that source and from pressure and interest groups, such as Age concern and Grey Power. But instead of action, 1998 was a year of deafening silence finally broken by the unfortunate indexation announcement and the setting up of a new taskforce.

To what extent then are we playing the political game by continuing to reinvent the wheel? I am not critical of the individuals involved, they have an unenviable task, but the taskforce, it might be argued, is in itself a source of instability. It does not have the support of all the major political players and its death warrant has been foreshadowed. I see by the full page ad in the Herald that the taskforce have a Kea bird called Superann. She appears to be pitting the young versus the old, and is asking some pretty rhetorical questions such as can we afford to retire and do we want the politicians to agree about long term policy? Surely most of us, except the most depraved, would answer yes to that latter question. And, after the last few years demonstration, surely we would answer 'no' to the question do you think they will? Are we any better off for knowing? A great deal of money appears to have been allocated for 'Public Relations' in a way that I suspect is a real turn off for a public jaded by the excesses of the public sector.

This new taskforce does not report till end of 2000, and acting on any recommendations will not take place till well into 2001, if at all. Let's be practical. The election is almost upon us. A change of government is highly likely. Labour must be diverted from its unilateral non-consultative stance and convinced of the need to reconvene the multi-party talks. Forget reporting at the end of 2000 and toying with referenda and entrenching legislation. We need a skilled negotiator now to map out areas of agreement and then keep the talks focussed on achieving compromise and ultimate agreement. Multi-party compromise is possible. I attended the 1993 multi-party talks which were guided most skilfully by Wyatt Creech. For the new talks the PRG suggested that the Retirement Commissioner play the chairman's role.

In the end, as section 3 of the paper expounds, it is the public support for the process that is important. Earlier this week I heard Ross McEwan, outgoing chairman of the ISI, expressing the frustration: "We have already had the taskforce and the PRG review - we now have the super 2000. How many more do we need to have before the politicians get together and agree on a long-term sustainable position?" The message that the parties must return to the negotiating table must be stated as loudly and as frequently as possible until the political parties finally get it. It will not be easy and we now start ten steps behind- but let's not give the politicians until the year 2001 or beyond.

To be specific re the paper to conclude: I like the proposal, which also came from PRG, to make the Office of the Retirement Commissioner into an Office of Parliament. But some of the other proposals have dangers. One of these is the formalisation of NZS as a contract. Contracts are for the private sector. What the state can and should provide is a social contract. This is much less restrictive and gives not a contractual right but a statutory right to a pension. It is wrong in my view to cite the GSF or the NPF as examples of the state's ability to contract in this area as these are pension schemes for specific employees with government acting in quite a different role, as an employer.

Many of the issues raised in this paper are worthy. These suggestions build on the PRG's deliberations and offer ways of putting more sand in the wobble doll. But only with multi-party talks, can issues of dedicated tax, select committee scrutiny, sunrise clauses and the like be usefully progressed. Assuming that the concept of stability means dampening down the oscillations also begs the question of whether the doll is already in the right place. Indeed the paper concludes that we can discuss stability in a vacuum and that there is merit in having a process that could provide stability no matter what the framework. I disagree. The notion that the framework itself could and might change dramatically is itself destabilising.

The metaphor can be pushed too far, but sliding the wobble doll to a better position requires smooth co-ordinated gradual action, not a quick punch, or standing the doll on its head, or a discontinuous and surprise displacement.

To sum up: I would hope that the taskforce uses it position, and undoubted powers of persuasion, to insist on multiparty talks, say, immediately after the election. As the PRG said there are vast areas of agreement already. Lets find out what is right with the NZ wobble doll. Second through the multiparty process lets get more the sand in the doll. And third lets use the process wisely to get gradual improvements in the shape of the doll and in the place she sits.
 

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